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Equity Crowdfunding Services in Singapore
What is the main difference between rewards-based crowdfunding and crowdinvesting, hyperfunding or crowdfund investing? Well, the main difference is the returns which investors get for their investments.
Rewards-based crowdfunding platforms are – as the name implies – rewards-based, and investors who are involved in this option often receive a token gift which may come in any form, from thank you notes or some kind of product or service from the company.
Equity crowdfunding on the other hand, will enable investors to purchase equity from the company. This allows investors to either enjoy dividend payments from the company, or cash their investment out from an eventual exit.
Are There Any Risks Involved in These Crowdfunding Services?
In equity crowdfunding services, yes, it is considered a rather risky investment manoeuvre. This is because the government is still trying to figure out the best way to regulate this form of investment vehicles. The main problem is attempting to mitigate the cases of fraud which have been reported by companies, along with the losses which are being incurred by unaccredited investors.
The Equity Crowdfunding Services in Singapore
The Singaporean government is heavily involved when it comes to the regulation and promotion of equity crowdfunding platforms. These platforms in Singapore will be required to possess a license known as the Capital Markets Services License or CMS.
The Monetary Authority of Singapore released new regulations sometime last year regarding equity crowdfunding platforms in Singapore, and new rulings have made it easier for companies to seek funding and for investors to make investments.
The notable changes which have been enforced by the Monetary Authority of Singapore include:
- Platforms which facilitate investment offers of less than SGD$5 million within a 12-month period will be exempted from prospectus requirements.
- It is no longer considered a breach of the Advertising Restriction if a company wants to publish information about the company for the purpose of raising funds.
- Platforms which are catering only to accredited investors will no longer need to put up a SGD$100,000 security deposit, as long as the base capital has been reduced from SGD$250,000 to SGD$50,000.
Entrepreneurs who are keen to raise money through equity crowdfunding services in Singapore can choose to do so via mandatory convertible bonds, convertible bonds, revenue and debt sharing.
What’s the Secret to Success with Equity Crowdfunding Services in Singapore?
Diversifying your portfolio. Because the equity crowdfunding market in Singapore is still relatively young, you need to perform your own due diligence to ensure that these platforms are going to be the suitable choice for you.