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ECF Success Stories

Equity crowdfunding is becoming more and more popular around the world as an alternative form of investment, and naturally there are also a host of companies that are reaping the rewards of seeking funding. Despite being a considered high-risk investment, many investors are happy to take a punt in the hopes of hitting it big in the event of an initial public offering (IPO) or buyout. Here’s a few success stories that have emerged from the fledgling world of ECFs.

Uber

This ride-hailing giant certainly needs little introduction, but the circumstances in which investors in ECF platform OurCrowd managing to secure shares is certainly a unique one. As early investors in JUMP, an electric bike-sharing firm, they acquired shares in Uber when the ride-hailing giant bought the fledging service to compliment their own offerings in April 2018. Further down the line, OurCrowd tripled their position in Uber, setting them up for a very healthy return for the eventual IPO in May 2019.

Although OurCrowd CEO, Jon Medved, didn’t divulge any details about the returns to investors, he claimed they were “very happy”. The lack of controversy surrounding this statement is probably enough proof that its platform’s users are very much on his side!

Beyond Meat

For OurCrowd, one IPO clearly isn’t enough! The ECF company was also an early investor in meat substitute firm Beyond Meat, participating in a later stage round one year prior to its IPO. Amazingly, their IPO took place in the same week as the Uber IPO, making for a very profitable seven-day window for its investors!

Its share price opened at US$25 on launch day, hitting a high of US$234 in July 2019. At the time of writing, Beyond Meat is holding steady at US$96 which indicates that investors in the business have gotten their money back and then some! Even if there’s a lock-in period, which is a pre-determined length of time in which they cannot sell their shares, the price trend to date bodes well for the future!

Jayride

The trend of equity crowdfunding is also spreading down under! Australian transfer comparison website Jayride secured around A$665,000 in funding across three raises on equity crowdfunding website VentureCrowd. In 2018, the company was listed on the Australian Securities Exchange (ASX) following a A$1.5 million IPO, which gave investors their first chance to secure a successful exit.

With shares priced at A$0.24 during the ECF round, the listing share price of A$0.50 meant those who chose to cash out after the ASX listing would’ve seen a whopping 108% in returns! According to Jayride CEO Sunny Yu, around half of the 19 investors in the company sold their holdings at the time, making them the first Australian investors to secure a successful ECF exit. Although its share price today is hovering around A$0.34, those that exit now would still make a profit on their money, which marks a successful investment.

MyCash Online

One of Malaysia’s homegrown success stories in the industry, MyCash Online is the among the first few businesses in Malaysia to have a verified ECF exit. A group of early investors in the fintech startup accepted a buyout offer by 500 Startups, giving them a 44.2% return on their initial investment.

However, the majority of initial investors chose not to exit, demonstrating faith in the project under the stewardship of CEO Mehedi Hassan to date. Should the company continue its meteoric rise, the decision could pay off very handsomely in the future.

Though there is a sizeable risk to consider when deciding whether to participate in ECF rounds, global success stories offer not just inspiration, but also credibility to the model. The next unicorn could easily be lying in wait for their next round of funding which you can get involved with. Who’s to say it won’t come from Malaysia?

Click here to invest now.

Disclaimer: Our articles are not and should not be taken as financial advice. You should conduct your own research carefully and be fully aware of all implications prior to making any investments.

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How to Identify a Potential Equity Crowdfunding (ECF) Success?

Congratulations! You’ve decided to venture into the exciting new world of equity crowdfunding (ECF) and are now on the lookout for potential businesses that could potentially deliver a huge return on your investment. It should be easy right? Unfortunately, it’s not quite that simple.

If it were as easy as monitoring the NASDAQ index or checking the Alibaba share price to decide whether to buy or sell, more people would be putting their money in. Like all investments, there are no sure-fire bets although there are some key factors that can indicate growth potential and possible success. Here’s a few things to look out for before investing:

Revenue

This is the number one factor that sharks and dragons on those popular business reality shows look out for before investing in a company. Revenue is the most basic form of feedback that a market can give a business – if there’s no interest in the product or service, there will be no revenue! Look out for revenue data from the company you’re planning to invest in. If there’s multiple years of data, read it all to see if you can identify patterns in the revenue stream. Is it continually growing? Can lower revenue in a particular year be attributed to forces beyond the company’s control?

Revenue is a key figure that can show whether a business is on track to grow further or if it’s in decline. If there is a strong pattern of growth over several years, this indicates that the company is gaining more and more customers, and vice versa if the pattern is going the other way! Don’t just look at profits – even unicorns like Uber aren’t there yet!

User base

This is another key factor that should be taken into account before investing in a company. The number of customers highlights not just the popularity of a business, but also the potential for a repeat sale. For example, Amazon Prime has a user base of over 100 million and growing in the United States alone, which is a huge potential market to target with products and services.

A growing user base offers the same feedback as growing revenue – it indicates that consumers enjoy the product or service and are either returning or introducing more customers to the business. Similarly, numbers that are declining or stagnant suggests that a business may either be dropping in quality or have run out of ideas. Not a good look for potential investors!

Founders

If you’re interested in backing a company through equity crowdfunding, it’s probably a good idea to look up what its founders have done in the past. While past failures and successes do not guarantee similar results in the future, you’d probably be much more at ease investing in a company where the boss has been there and done that!

Generally speaking, companies that aim to raise funds via ECF are more mature startups and have either a proven track record or a proven product/service and demand. This can be traced back to the founders and how they run the company as a whole. When researching a company, if a founder has an established track record of success, it’s a good sign of credibility as they are very likely either subject matter experts or thought leaders in their field or industry. 

This is their unique selling point, in that they are likely to have an edge over competitors thanks to their track record. In such a case, funds raised via ECF is likely to be used not just to expand their business, but to pioneer more advanced products/services or to advance the industry as a whole. Think of companies with the potential to disrupt existing industries to create a whole new giant such as Uber or Airbnb. These are the kinds of founders you want to invest in.

Serial entrepreneurs may wear that badge with pride, but only a select few can call themselves successful. After all, who wants to invest in a company with a founder that has a track record of helming failing businesses? Past accomplishments demonstrate that founder(s) have the relevant skill set to build a successful business repeatedly, which is a key ingredient to any startup. For example, if Jack Ma, the former Alibaba chairman, wanted to start another business, you can bet your bottom dollar he wouldn’t have any shortage of offers from ultra-high net worth investors around the world.

Should You Invest in ECF?

Ultimately, there is no guarantee that the business you invest in will provide a return on your investment, even if you’ve done as much research as possible. External factors like the economy can have an adverse effect on a business no matter how strong the foundations are.

Similarly, the most accomplished founder may finally hit an obstacle too big to overcome. However, considering the factors listed above will give you a solid base to make a well-informed decision that will put you in the best possible position to succeed as an equity crowdfunding investor.

Click here to invest now.

Disclaimer: Our articles are not and should not be taken as financial advice. You should conduct your own research carefully and be fully aware of all implications prior to making any investments.

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What on Earth is ECF and Why is it a Good Investment?

What is ECF?

Equity crowdfunding (ECF) is an investment vehicle that allows any individual the opportunity to invest in companies for a return in equity (shares). ECF is quickly becoming popular with younger folks who have  a higher risk appetite and with people looking to diversify their investments from the usual options like the stock market. 

The low initial capital required makes it a very attractive option for those looking to get started on their investment journey, coupled with Malaysia being a ripe market that is continually expanding. The reason ECF is deemed as ‘high-risk’ is due to how it is structured. 

How does Equity Crowdfunding Work?

Equity crowdfunding is a long term investment where investors (like you) can invest up to RM5,000 per year to own equity in a company. Think of it as being an early investor except that it comes at a much lower cost and much higher potential profits! Businesses looking for a set amount of funding will offer up a percentage of equity in return, with the equity interest of each investor proportionate to the amount invested. So for a relatively small amount of money, you’ll be able to own a slice of the pie.

However, there’s no timeline as to when you’ll get to see your money back. Returns only come when: 

  1. The company is bought out by another company (i.e capital gains through selling of stake) Example:  Pappa Rich Group buying out eatcaketoday.com for undisclosed millions, making an easy 500% in returns within 12 months for the initial shareholders.
  2. The company becomes profitable and chooses to pay dividends to its shareholders

Who is Eligible to Invest?

The Securities Commission Malaysia (SC) have broken down investors into three categories:

  • Sophisticated investor
    – Over RM3 million in net assets
    – Prior experience investing in securities
    – No investment cap
  • Angel investor
    – Gross annual income of at least RM180,000 or RM250,000 with spouse
    – Investment cap of RM50,000 per company, and RM500,000 over 12 months
  • Retail investor
    – No minimum income required
    – Investment cap of RM5,000 per company, and RM50,000 over 12 months

How Do You Start Investing?

  1. Becoming a retail investor is easy, but you’ll need an account first. To create one, sign up with your email address and password.
  2. Your account is now up and running, but don’t rush to invest right away. As per the regulations of the Security Commissions Malaysia, you’ll first have to verify your identity.
  3. You will fall under retail, sophisticated or angel investor. Choose the relevant option for yourself before going through our Know Your Customer (KYC) process. 
  4. Once verified, you’re now part of our network of investors! 
  5. You can pre-book investments or simply check out our offerings and see if anything stands out to you.
  6. Click the Invest Now! button to invest, where you can determine the amount of money you want to put in.
  7. If any of our campaigns don’t reach the amount needed to raise, you will get a full refund.

Pros and Cons of Investing in ECF

It is important to be aware of the potential drawbacks of any investment vehicle. As ECF is classified as a high-risk investment, consider the following:

High risk

This goes without saying but investing in issuers is a high-risk game. Without trying to scare off investors, the rewards can be lucrative, but the downside is high. You’re essentially investing in the belief that the issuer will continue to grow steadily before being bought or taken over by another investor or group, which is when your stake will come into play. However, there is no guarantee that this will ever happen, which brings us to our next point…

No timeline for returns

Want your money back fast? ECF might not be for you. There’s no limit as to how long it will take before you can get returns, it at all. A potential exit could take anywhere from a year to a decade or longer – it all depends on how well the company performs, and if larger investors want to buy a controlling stake! In addition, if the company goes bust, your investment goes down with it. However, this is true for any high-risk investments such as stocks or cryptocurrencies, so only invest what you’re prepared to lose.

High returns

If the company you invested in made an exit, congratulations! You’ll have the option of cashing out or holding onto your shares in the hope that they will be worth much more down the line. In 2019, Malaysia saw three successful exits in the ECF space with investors in Skolafund, Mycash Online and Greenlagoon getting anywhere from 10% to 100% in returns!

Easy to get started

You don’t need large investment capital to get started in the world of ECF, which is why it’s quickly gaining popularity among younger investors. In fact, one of 2019’s success stories (Skolafund) set a record for the smallest investment entry size – a mere RM10! It’s unlikely that you’ll want to beat that record if you choose to invest but it just serves to highlight how it doesn’t take much for you to get into the game!

Is ECF the Right Investment for You?

To conclude, it’s always important to think of investing for the future as you never know which way the wind will blow. Plus, if you have additional money sitting in your bank account, it’s much better to let it work for you instead of collecting interest that doesn’t even beat inflation!

It’s important to note that while traditional investment methods should never be discounted, it’s also wise to dedicate a portion of your investment portfolio to slightly higher risk ventures to balance out the steady returns with appropriate risk and reward. After all, it only takes one success story to bring you one step closer to financial freedom! 

We hope we’ve managed to shed some light about the pros and cons of this exciting new vertical in investing. If you’re keen on getting started, click here to invest now!

Disclaimer: Our articles are not and should not be taken as financial advice. You should conduct your own research carefully and be fully aware of all implications prior to making any investments.

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Starting Your Investment Journey With Just RM 2,000

There’s a popular Chinese proverb that says: “The best time to plant a tree was 20 years ago. The second best time is now.”

The same can be said of investing – the earlier you invest, the more time you have to accrue returns. While many people are aware of this, they often hesitate because there’s a perception that it takes a significant amount of funds and knowledge to start investing. Luckily, there are plenty of options available nowadays to retail investors (i.e the everyday rakyat), so it doesn’t take much to get started! Here’s a few options that you can consider depending on your risk appetite:

Fixed deposit

Risk: Low
Returns: 2.x% to 4.x% 
Experience Required: None, just deposit the money and let it grow!
Starting Amount: RM600 onwards

This is perhaps the safest way to start off your investment journey. It’s generally a low-risk option that will help your money keep its value by staving off inflation. It’s a great way to save up while earning consistent returns on those savings.

Getting Started: Banks in Malaysia will offer you anything from 2.x% to 4.x% depending on various promotions that are available, and it is advisable to compare what all of them are offering on sites like iMoney before putting in your hard-earned cash. After all, this is essentially giving banks your money and allowing them to grow it on your behalf. So look around and be sure to get the best possible deal for yourself because you’re trusting others to handle your money!

REITs

Risk: Medium
Returns: 5% to 7% on average
Experience Required: Some research on property markets and portfolios required before investing
Starting Amount: About RM100

Real Estate Investment Trust (REIT) is, to put it simply, like a combination of the stock market and properties. Essentially, you are investing in a portfolio of commercial properties (eg. shopping malls, warehouses, office buildings, hotels etc.) with returns paid out from the collected rent. REITs allows retail investors to get into the property game with a relatively small amount, but it also generally provides consistent dividends at a higher than average rate compared to a single rental property.

Getting Started: You should conduct some research to see what types of properties are in the portfolio of each REIT. Let’s say you’re eyeing up the Sunway REIT – you should consider the types of properties in their portfolio and how popular they are. Are their malls consistently packed? What about the occupancy rate of their condominiums? Reading glossy reports may paint a rosy picture, but if you know the actual numbers on the ground, you’ll certainly feel a lot more confident in your investment. Once you’re convinced of the potential success of the REIT, find a broker that offers such services to get started. You can read more about REITs and how they work here.

Stock market

Risk: Medium to high
Returns: Varies from year-to-year but historical stock market average return is 10%
Experience Required: Research on companies you plan to buy stocks in is needed in order to forecast potential success
Starting Amount: 1 lot (100 shares), price will vary

It doesn’t take a lot of skin to get into the stock market game, and most people will have some idea of what trading entails. However, it’s also one of the hardest investments to get right. There are multiple variables to consider when purchasing a company’s stock and you’ll need to do plenty of research to ensure you have a base understanding of its health, prospects and viability. With that being said, you can really hit it big if you get it right but bear in mind that it goes both ways!

Getting Started: As with all investments, you’ll want to do some thorough research on the stocks you want to invest into. For example, if you want a piece of Maybank, it’s a good idea to read their latest annual reports, track the historical Maybank share price and keep abreast of recent news involving the company. You’ll also have to decide if you want to invest in individual stocks or index funds that can spread your risk more. Be sure to check out comparison sites like iMoney to find out which platform best suits your needs.

Equity crowdfunding (ECF)

Risk: High
Returns: Usually starts from around 50% to more!
Experience Required: Research on the potential of issuers is needed to make a well-informed decision
Starting Amount: RMxx

This is a fairly new concept in Malaysia, but it’s quickly becoming popular with retail investors as it can be an investment with a huge payoff despite the risks involved. Like all the other options above, you don’t need much to get started but the difference is that there is no timeline for you to get a return. It could be in a year, a decade or not at all in a worst-case scenario. Investors rely on the company growing steadily before being sold at a higher valuation than when they first invested, which is where returns come in.

Getting Started: Leet Capital is one of 10 recognised market operators in the ECF space according to the Securities Commission Malaysia. Currently, there is a reported RM80 billion funding shortfall for SMEs on such platforms in Malaysia alone, which indicates that the market is ripe for growth.

Click here to invest now! 

Disclaimer: Our articles are not and should not be construed as financial advice. You should conduct your own research carefully and be fully aware of all implications prior to making any investments.