SEC endorses crowdfunding as alternative financing option for MSMEs, startups

SEC endorses crowdfunding as alternative financing option for MSMEs, startups

MICRO, small and medium enterprises (MSMES) and startups may turn to crowdfunding as an alternative financing option to grow their businesses.

During the second leg of its nationwide roadshow in Cebu City, the Securities and Exchange Commission (SEC) on Friday, March 17, 2023, pitched to the Visayas-based MSMEs and startups crowdfunding as an accessible and convenient means for businesses to secure funds for expansion.

Crowdfunding is a fundraising activity typically conducted by startups and SMEs, where the public can support or fund a business idea through an online platform. The method was initially used to fund social and creative projects but has recently expanded to various types of business projects, including startups.

Edison Tsai, executive director at SeedIn Technology Inc., said crowdfunding democratizes financing as it connects those who are willing to invest with those in need of funds for a specific project using an online platform. He said investors could freely choose which projects to fund for as low as P1,000.

Tsai said his company, for instance, is helping Filipino businesses and startups thrive as its platform matches them to its pool of investors in over 80 countries.

Besides SeedIn Technology Inc., other registered crowdfunding intermediaries registered with SEC like Investree Philippines Inc. and Eastern Securities Development Corp. (Round One) also encouraged the attendees to try out crowdfunding and tap into their services.

This new mechanism in raising capital is a welcome development, according to Kelie Ko, president of the Mandaue Chamber of Commerce and Industry (MCCI). He said crowdfunding can help existing MSMEs hard hit by the pandemic to recover faster.

The roadshow attracted more than a hundred onsite participants and 185 virtual participants, consisting of executives from companies, business groups and government agencies such as the Cebu Chamber of Commerce and Industry, MCCI, the Department of Trade and Industry and the Cebu Provincial Government, among others.

The initiative aims to harness the potential of MSMEs for further growth, in line with President Ferdinand “Bongbong” Marcos Jr.’s thrust to provide different financing options for small businesses.

“This government recognizes that MSMEs are the backbone of a resilient national economy, due to their nature of stimulating domestic demand through job creation, innovation and competition,” SEC Commissioner Karlo Bello said in his keynote speech.

“In fact, the Philippines’ MSME network accounts for 99.5 percent of the total businesses in the country, hires 63 percent of the local workforce, constitutes 25 percent of the country’s total exports and contributes around 40 percent to the national gross domestic product.”

As of December 2022, over 200 businesses have successfully raised capital through the platforms of Investree and Seedin Technology.

SeedIn Technology’s platform alone has seen a total of P1.34 billion raised funds for 259 projects during the same period.

Stock market

Besides tapping the crowdfunding platform, the Philippine Stock Exchange (PSE) also encouraged MSMEs to explore listing on the stock market as an option to expand one’s business.

PSE president Ramon Monzon said companies enlist in the stock market to raise capital, launch new products, fund international expansion and fund research and development, among others.

Among the benefits of a listed firm include access to long-term capital, seal of good housekeeping, enhanced liquidity and sustainability and corporate governance, hiring and retention tool, tax efficiency and inter-generational transfer.

“The PSE offers capital raising potential for MSMEs,” he said.

Provincial Board Member Glenn Soco expressed his gratitude to the SEC for bringing the roadshow to Cebu, as it aligns with the Provincial Government’s vision for promoting the growth of MSMEs.

“When we talk about MSMEs, the Provincial Government is all ears. MSMEs support what Cebu is all about. We could not imagine Cebu without its micro, small and medium enterprises,” Soco said.

The roadshow was led by the newly created SEC Office for the Advancement of Strategic Investments in SMEs, which was established with the aim of encouraging SMEs to consider the capital market as a financing option.

The effort is part of the SEC’s 888@88 goal, which aims to see a minimum of 888 companies accessing the capital market in time for the SEC’s 88th anniversary in 2024.

After Davao and Cebu, the SEC will bring its monthly roadshow to other areas in the country, including Cagayan de Oro, Zamboanga, Bacolod, Legazpi, Iloilo, Tarlac, Baguio, the Calabarzon region and Metro Manila for the rest of the year. (KOC)


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