Malaysia’s IAP Integrated and Ata Plus will start sharing venture leads in an alliance they hope will expand investment options for start-ups and SMEs.
IAP Integrated is a crowdfunding platform owned by Raeed Holdings that is backed by a consortium of six Islamic banks. Ata Plus is an equity crowdfunder licensed with the Securities Commission.
“Working together was inspired by the fact that IAP is not able to provide all the needs of our applicants,” IAP Integrated CEO Joann Enriquez told Salaam Gateway.
“When IAP reached out to us for a potential collaboration - we were happy at the chance to provide greater avenues of funding for the early stage ventures who were high-potential but are unfortunately too young to produce all the documentation and track record required to list with IAP,” said Ata Plus co-founder and director Elain Lockman.
The platforms serve companies of different profiles. Equity crowdfunders in Malaysia serve start-ups or early-stage companies that typically find it hard to qualify for bank financing while banks-backed IAP takes on businesses that meet more stringent screening.
Companies looking for investments on the IAP platform must first pass a credit evaluation and screening by the six banks, explained Joann. Companies must show a viable and profitable business that is adequately capitalised and in operation for at least five years.
“IAP is a crowdfunding platform and banking facility either in the form of investment or finance is required before the crowd of investors can come in and invest in the company via the share of profit of the banking facility,” the IAP Integrated CEO explained.
In contrast, companies on Ata Plus are not screened by a bank. Under Securities Commission rules, an issuer on an equity crowdfunding platform can raise up to 3 million ringgit within a 12-month period and a maximum of 10 million ringgit in its lifetime. These companies are normally in their early stages and have been in operation for fewer than five years.
IAP is fully Shariah-compliant, and Ata Plus offers Shariah-compliant securities
CONTRASTING PANDEMIC YEAR PERFORMANCE
Investments on IAP fell in 2020, which its CEO attributes to the halting of campaigns and roadshows due to COVID-19 restrictions. She did not disclose 2020 numbers.
“Although we have defaulted to online, we have not been able to in 2020 keep up with the significant growth we had in 2019,” she said.
IAP has invested 211.45 million ringgit ($52.3 million) in 14 projects since its launch in 2016. All the funds raised went to SMEs except for one listing of 60 million ringgit that was a portfolio of seven corporate clients, said Joann. Average listings fell between 4 million ringgit and 20 million ringgit.
In contrast, Ata Plus had a much better 2020.
“Ata Plus has seen a tremendous increase in the investment coming onto our platform to support these companies that are fundraising with us in 2020 by five times compared to 2019,” said Elain.
The platform had 24 campaigns listed in 2020 compared to nine in the previous year. 20,373,968 ringgit ($5.04 million) of funds from 418 investors passed through Ata Plus last year compared to 410,230 ringgit from 72 investors in 2019.
“We believe the increase in the total fundraising amount for year 2020 was due to increased awareness of equity crowdfunding as a viable investment instrument and also due to the Government’s MyCIF matching fund investment ratio being increased from 1:4 to 1:2 as an incentive to support the SMEs during the pandemic,” said Elain.
Ata Plus has raised over 40 million ringgit for 30 companies, according to its co-founder and director. The equity crowdfunder facilitated investments for companies across a range of sectors, including events management, biotechnology, e-commerce, information and technology, infrastructure, agriculture, human resources, and retail.
Both IAP and Ata Plus expect increased activity this year, with the equity crowdfunder looking to double what it achieved last year.
The two women did not commit to a projection as to how much their alliance could facilitate for companies but said that they have around 60 historical applications they can reach out to.
The partners foresee benefits for their respective investors as well. “As mentioned by IAP, in terms of expanding their investor pool, investors who contribute to the IA funds that IAP manages are now also able to explore the prospect of diversifying their investment portfolio through investing in Ata Plus,” said Elain.
“In terms of improving the number of investors, SMEs and start-ups reached, our resources go farther when combined,” she added.
The IAP Integrated CEO echoed her sentiment. “At this day and age, plus you add the COVID-19 disruption, it is critical to collaborate where you can. It is a must,” said Joann.