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Local crowdfunding platform to tap 'mass affluent' with easing of MAS rules

Wednesday, March 29, 2017 - 05:50

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Local crowdfunding platform FundedHere, which has been offering crowdfunded equity and loans to wealthy "accredited investors" in Singapore, wants to open up its platform to professionals earning at least S$100,000 a year, partner Daniel Lin said on Tuesday.

Singapore

LOCAL crowdfunding platform FundedHere, which has been offering crowdfunded equity and loans to wealthy "accredited investors" in Singapore, wants to open up its platform to professionals earning at least S$100,000 a year, partner Daniel Lin said on Tuesday.

It is also eyeing acquisitions of crowdfunding platforms in Malaysia and Indonesia to grow its footprint across the region, he said, adding that the company was "looking to do a fundraising round soon" to fund the purchases.

Speaking at the sidelines of a presentation at the Lattice80 coworking space in Robinson Road, Mr Lin noted that the Monetary Authority of Singapore (MAS) awarded the company a capital markets services licence last year that allowed it to work only with accredited investors, defined as people with at least S$2 million in net personal assets excluding their primary home or who earn at least S$300,000 a year.

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But in February 2017, the MAS took away the rule that restricted FundedHere to only accredited investors. That meant the firm could now target the "mass affluent", Mr Lin said, adding that the company was specifically looking for those earning at least S$100,000 who might have some understanding of the risky nature of crowdfunding and are less likely to lose their life savings through such an investment.

"We're not interested in the so-called man in the street . . . the ideal person (for FundedHere) is someone who has been three to five years in a professional circle", including doctors, lawyers and auditors, he said.

He also said that although people can invest as little as S$5,000 in crowdfunding products via its online platform, he hopes that in future investors will gradually become comfortable putting in up to S$20,000.

The firm has held fundraising campaigns on its platform for seven Singapore companies over the past year, which collectively raised slightly below S$4 million. Start-up equity investments accounted for 40 per cent of that amount and the remaining 60 per cent of funds raised were for loans of between S$200,000 and S$2 million, to both start-ups and small listed companies.

The first listed company to launch and complete a bond issue via the platform was MeTech International, which is listed on the Singapore Exchange's junior Catalist board and provides electronic waste management solutions. MeTech's S$2 million crowdfunded bond pays a coupon of 8 per cent per annum.

MeTech chairman Simon Eng told The Business Times on Tuesday that since its share price had dropped, the cost of raising funds by issuing shares was "actually much higher" than the cost of getting a loan. "A bank loan is always preferred but because we had suffered two years of a commodity rout, although we have turned profitable this year I don't think it would be easy to take a bank loan."

Loss-making Catalist-listed firm Kitchen Culture Holdings has also launched on the platform a S$2 million bond paying 9 per cent per year, and FundedHere is in talks with "at least 10" small-caps for crowdlending, Mr Lin said.

He added that the platform targets small-caps with a market value of between S$20 million to S$50 million and a bond amount of S$2 million seemed to be "the sweet spot" for listed company crowdlending on FundedHere.

The company plans to raise funds to buy domestic crowdfunding platforms in Malaysia and Indonesia, but will not use its own platform to do that, Mr Lin said, adding that this was because it was looking for "strategic investors" that can bring along their own database of potential crowdfunding investors, such as data management firms or former private bankers who served wealthy clients.

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