(Full text of the interview here).
The Kuala Lumpur-headquartered ECF platform is also planning to launch closed Secondary Exchange this year. A Secondary Exchange/Market is an exchange where investors can trade securities.
“In Malaysia, a licensed ECF operator is allowed to list the prospectus of a crowdfunding campaign for a registered microfund managed by a licensed fund manager. Both the microfund and the fund manager must be registered with/licensed by the Security Commission (SC),” Lockman said.
“A portion of the fund can be raised on an ECF platform. The purpose of the crowdfunding campaign is to give the crowd an opportunity to invest in a fund (vis-à-vis in private limited businesses/SMEs/startups). Currently, only sophisticated and angel investors are allowed to participate in a crowdfunding of funds ECF fundraising campaign,” Lockman explained. “We intend to change this with a Crowdfund of Funds.”
Talking about the Secondary Exchange, she said that Ata Plus is looking at launching the prototype by this year, possibly by the end of the current quarter.
In ECF, a Secondary Market or Exchange refers to a closed marketplace, where investors can buy and/or sell shares to and from other investors in privately-held companies that have previously successfully raised funds through equity crowdfunding.
“For an equity crowdfunding market to thrive, it needs to have an active participation from the crowd, that’s the investor community. Currently, an element of ECF that may be unattractive to investors may be the fact that the period by which the investors are required to hold their shares in the ECF issuer, i.e. until it goes for IPO or it is acquired. Therefore, it would be attractive to ECF investors if there is a way for them to either exit or make some upside in the medium term,” she elaborated.
She added that a closed Secondary exchange will enable ECF investors who have shares in an issuer under Ata Plus to buy from and sell shares to each other within a closed user group, hence allowing investors to sell down or increase their stakes.
“While it is in our roadmap to offer these products to the business and investors communities, these are still in progress in consultation with the regulators and is subject to the approval of the SC,” she said. “We are working on the protocols of the Secondary Exchange with the SC, and hopefully we would be able to launch a prototype by the end the third quarter,” she added.
Lockman also expects more cross-border ECFs to come into Southeast Asia in the coming years, either through joint ventures or strategic partnerships, as businesses become more regional and markets consolidate.
“Through efficiencies, ease of fundraising, disintermediation, lower costs, as well as offering considerable marketing visibility, crowdfunding may well become the funding vehicle of choice for the region’s huge army of SMEs in the coming years,” she remarked.
Founded in 2016 by Lockman, Kyri Andreou and Aimi Aizal Nasharuddin, Ata Plus is a blockchain-enhanced ECF platform, matching businesses who are seeking growth and funding with investors who want to partner in building sustainable world class companies.