What is Equity Crowdfunding (ECF)?

Equity crowdfunding (ECF) is a modern fundraising approach where private companies sell shares to the public through online platforms registered with the Securities Commission Malaysia (SC). It enables small businesses to secure funding from investors who believe in their potential, offering a stake in the company in return.

How does it work?

Companies submit crowdfunding campaigns on established ECF platforms such as Mystartr.
ECF platforms evaluate, approve and oversee the campaigns
Investors contribute to the campaigns by purchasing the companies’ shares
Companies receive the funds, while investors acquire a share of ownership in the companies

Is equity crowdfunding legal in Malaysia?

Yes, equity crowdfunding is permitted under Malaysian law. The Securities Commission of Malaysia (SC) regulates and licenses platforms that facilitate equity crowdfunding activities. It is crucial for Mystartr to adhere to the RMO Guidelines as mandated by the SC to maintain compliance with regulatory standards.

Limitations of Raising on ECF Platforms

An issuer can only fundraise on one ECF platform at a time, with a maximum cumulative limit of RM 20 million throughout its existence. This excludes self-contributed capital and funds acquired through private placement exercises. It offers a secure and transparent platform for businesses and investors to collaborate, creating new growth avenues for businesses and enabling investors to invest in promising ventures.

Difference between Equity Crowdfunding (ECF) and Venture Capital (VC)?

	Equity Crowdfunding (ECF)	Venture Capital (VC)
Control	Businesses maintain control over the coany's direction and management.	Investors frequently participate in decision-making regarding the company's management and strategic direction.
Funding Goals	Ideal choice for small businesses aiming to raise a moderate sum of money.	Provide substantial funding for startups with high growth potential.
Due Diligence	The process is transparent, allowing investors to examine a company's financials and business strategy before investing.	Requires a thorough due diligence process, which can be resource-intensive and time-consuming.
Timeframe	Faster fundraising process, typically lasting 30-90 days for campaigns.	Typically takes several months to finalize and usually involves a long-term commitment from both the business and the investor.