If you run a small or micro business, you may have come across crowdfunding (ECF) and peer-to-peer funding (P2P) platforms offering funding options.
Unlike traditional financing offered by banks, ECF and P2P financing is fairly new to most Malaysian small business owners and many may not want to get into it as it is still considered alternative financing. But if the government also invests money in it, it helps pave the way for the involvement of micro, small and medium-sized enterprises (MSMEs).
The Malaysia Co-Investment Fund (MyCIF) was established in 2019 by the government to provide co-investments alongside private investors on ECF and P2P platforms and has helped local MSMEs raise over 2.7 billion RM funding over the past two years.
According to the MyCIF 2021 annual report recently released by the Securities Commission Malaysia (SC), the fund has successfully accrued a net return of RM4.6 million while helping over 2,200 MSMEs secure investment finance in this private-public sector co-investment initiative.
“Thanks to the continued support of MyCIF, the ECF and P2P marketplaces continued to grow in 2021 with a 74% and 122% increase in total fundraising for the two marketplaces respectively, as well as a 33.3% increase and 48.6% of the total number of successful campaigns and participating issuers in 2021,” MyCIF highlighted in its 2021 Annual Report Summary Statement.
“Additionally, social enterprises that have used the MyCIF-Social Enterprise program have successfully raised funds of approximately RM5.2 million through 28 P2P campaigns, with a zero default rate,” the statement added.
MYCIF also reported having successfully launched the pilot program to facilitate informal sector finance in partnership with Funding Societies, a P2P finance operator. The fund will co-invest in campaigns within the informal sector at a 1:1 co-investment ratio. This means that MyCIF will invest RM1 for every RM1 successfully raised from private investors on the finance company platform.
For 2022, the fund pays particular attention to MSMEs linked to the agricultural sector which has been identified as being of strategic importance for Malaysia’s economic recovery.
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