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SEC approves online fundraising rules for startups, SMES

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THE Securities and Exchange Commission (SEC) has approved the rules on crowdfunding to help startups and small and medium enterprises (SMEs) gain access to funding.

This move will allow financial opportunities for startups and small businesses in Cebu, said Maria Elena Arbon, assistant regional director of the Department of Trade and Industry (DTI) 7, Thursday, July 11, 2019.

“The new crowdfunding rules is a welcome development. It is also a signal that the government is opening up to new business models brought about by technological developments,” she said.

Crowdfunding, as defined by the SEC, is a fundraising activity conducted through an online platform usually for startups and SMEs.

“It’s more on the investment side like securities, and this is good because this opens up investing down to the grassroots through crowdfunding platforms and apps. As long as the platforms adhere to SEC rules then we can assume that investors are protected,” Arbon said.

With this, start-ups can now gain traction in their businesses through the help of an investor or group of individuals willing to pool money with interests in return.

On July 4, SEC approved the rules and regulations governing crowdfunding in accordance with Republic Act 8799, or the Securities Regulation Code, and international best practices and standards.

“Information and communication technology has made a significant impact on our financial environment. With the rules and regulations governing crowdfunding in place, the Commission hopes to support recent financial innovations on providing easier access to finance especially for smaller business startups or ventures while ensuring the integrity and fairness of financial systems and the protection of investors,” said SEC chairperson Emilio Aquino, in a statement.

The fundraising approach involves three parties, namely: the entrepreneur or project initiator; the supporters or those willing to fund the entrepreneur’s business idea or project; and the platform or moderating organization that brings the entrepreneur and supporters together to realize the business idea or project.

Supporters make their contributions or donations through online platforms. The platforms will then coordinate and administer the fundraising activities.

“So the benefit will be on both sides of the coin. Those who are looking for investment opportunities are protected while SMEs and startups will be able to raise funds through the crowdfunding platforms,” Arbon said.

The DTI officials said there are about 30 to 50 startups in the region. Arbon said they are constantly doing networking programs as well as coordination with other government agencies to aid in the balance of brick-and -mortar businesses and the start up ecosystem. (JOB)


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