Crowdfunding has been one of the true disruptive technology success stories of the last decade, and also one of the most publicly visible facets of FinTech.
While the USA has led the way, and Europe has followed in its wake, adoption in Southeast Asia was slower to take off. However, over the last few years that has changed, with Singapore playing a leading role.
The island city is rapidly becoming a regional hub for FinTech activity, not least that of crowdfunding in all its various implementations, from equity through rewards to donation funding types.
Such is the rapid growth of financial technology in Singapore that the island hosts an annual FinTech Festival to showcase its leading players, with the event sponsored by both the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) - a striking sign of the importance placed on this sector of the economy by both government and major commerce.
But what factors lie behind Singapore leading the way?
The Lion City's tradition of economic dynamism no doubt plays a significant part, granting the advantage of early mover status, but regulatory changes have given the sector a significant boost, in line with Singapore's reputation for its ease of conducting business.
As with other jurisdictions, in Singapore crowdfunding is covered by securities legislation, and all platforms with an equity element require a Capital Markets Licence issued by the MAS in order to operate.
This formerly placed significant burdens on crowdfunding platforms, such as the need to have a capital base of S$500,000 held in reserve to cover investors' deposits.
Platforms also had to issue a prospectus for investments to comply with equity laws, and register these prospectuses with the MAS.
Even if the platforms operated as a simple connection marketplace, a financial advisor's license was required.
A few years ago, these restrictions were eased considerably.
Crowdfunding platforms can now run campaigns aimed at raising up to S$5m over 12 months without a registering a prospectus, and for typical crowdfunding operations a far smaller capital base is now required. What's more, several privacy and data laws have also been clarified to remove some of the legal grey areas platforms previously had to navigate.
The upshot is that it is now easier for crowdfunding platforms to operate profitably while keeping the needs of both initiators and investors in balance, and this is reflected in the growing choice of platforms available to startups and SMEs that are looking for funding.
Some of the more popular and significant players include are listed below, with ever more platforms acquiring MAS licenses since the regulation changes.
Major Singapore Crowdfunding Platforms
- FundedHere - Targeting startups in Singapore and Greater China, this platform received its Capital Markets Services Licence from the MAS. It offers both seed and angel funding, along with the facility to set up additional funding rounds as enterprises mature. The platform facilitates equity and debt funding with investments as low as US$3,700 / S$5,000.
- MoolahSense - A pioneer of Singapore marketplace lending, it is one of the platforms to be awarded a full CMS licence, and can operate across all investment classes. It has so far raised around S$20m for over 100 SMEs.
- Kapital Boost - A Singaporean SME crowdfunding platform notable for providing Islamic-compliant services. Still a small player in volume terms, having raised around S$1.3m across 26 campaigns, it is nonetheless expected to grow after being endorsed by the Financial Shariah Advisory Council (FSAC) for its Murabaha crowdfunding structure.
- Crowdo - A start-up covering the SE Asia region, offering a range of FinTech services including equity crowdfunding and peer-to-business lending. Operating since 2013, the platform boasts over 17,000 international members, and has generated funding for companies in 50 countries across five continents.
- CoAssets - The first Southeast Asian platform to be publicly listed, it operates across the region with offices in Singapore, Malaysia, China, Indonesia, and Australia. CoAssets offers 'traditional' SME crowdfunding along with other products such as real estate development crowdfunding solutions.
- OurCrowd - An Israeli-based company which in autumn 2016 opened its first Asian office in Singapore. It allows investors to invest US$10,000 and upwards, with a focus on tech companies in fields such as machine learning, big data, cybersecurity and agricultural technology. OurCrowd has total accumulated investments of more than US$320m under its belt.
Wrapping Up: Crowdfunding in Singapore
2020 has seen a significant uptick in Singapore's crowdfunding industry as the combination of decreased regulation and increased publicity boosted overall activity.
It seems clear that Singapore as a nation intends to capitalize on its early lead to become a major financial center in the new era, which can only be positive news for entrepreneurs, ecommerce innovation, and crowdfunding across the entire Southeast Asia region.
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