The P2P financing market in Malaysia has seen a huge increase of 300% in 2018 compared to 2017. There were 418 campaigns that ran across the six licensed players in 2017, while in 2018 there was an increase in campaigns to 2,000. That’s not all as funding raised also increased by 900% at RM159.6 million compared to RM17 million in 2017.
Even the government got in on it, thanks to the announcement of the P2P housing scheme. The scheme under the FundMyHome platform is for Malaysians who are first-time home buyers, giving them the chance to pay only 20% to own a house while the remaining 80% will be financed by investors via a peer-to-peer financing framework.
With such a lucrative market, one of the main players Fundaztic, a P2P financing platform is preparing for the “gold rush” by raising RM3 million through equity crowdfunding (ECF) platform, pitchIN. The deal broke records as it was the fastest ever funded ECF deal in Malaysia—raising RM3 million in just 38 minutes.
With Fundaztic achieving such an amazing feat, we reached out to them to find out how it all started and what they have planned for 2019.
How It Began
Fundaztic is actually fully owned and managed by Peoplender Sdn Bhd which was established in December 2015. Peoplender was started solely to apply and obtain the peer-to-peer Financing (P2P) operating license given by the Securities Commission (SC) of Malaysia.
In November 2016, Peoplender Sdn Bhd was one of the 6 companies out of over 50 applicants to receive the license to operate P2P Financing in the country registered with SC. Fundaztic eventually went live in July 2017.
Fundaztic P2P Financing is basically a fully online, debt based crowdfunding platform where SMEs can apply for funding for their business without leaving the comforts of their office/home.
On the other hand, individual or institutional investors who are looking to invest and grow their wealth can now crowdfund into the debt of these SMEs and in return, gain from the interest on the repayments from the SMEs.
It all started thanks to the company’s founder and chairman, Jeffrey Chew who realised that there was a big gap for funding among SMEs in the country, especially for small, micro-enterprises and startups.
“Many of these businesses aren’t being serviced by traditional Financial Institutions (FIs) not due to them not being credit-worthy but mainly due to certain regulations and policies set by the FIs,” said Calvin Foo, Fundaztic’s Outreach and Engagement Lead.
Fundaztic is made up of a core team with over 50 years combined experience in banking and law. The founder and non-executive chairman of Fundaztic, Jeffrey Chew has had a stint in Citibank and was also the Director and CEO of OCBC Bank for six years. He is also currently the Group CEO of Paramount Corporation Bhd.
Kristine Ng is the Director and Founding CEO of Fundaztic. Prior to her role in Fundaztic, Kristine was the Executive Vice President (Business Development) at the Credit Guarantee Corporation (CGC).
Michael Ooi is the co-founder and Director of Fundaztic. Besides his work as a Managing Partner of a law firm, he has been serving as an Independent Non-Executive Director for various Bursa listed companies since 2003.
Gary Tan is another co-founder and Director of Fundaztic. He has over 30 years of experience in both business and risk management with particular emphasis on SME lending. During his tenure with OCBC Bank, he was responsible for developing Malaysia’s first end-to-end SME lending model—the Enterprise Mass Market Model.
Why Go Through ECF?
Calvin mentioned that Fundaztic chose the ECF route to raise funds, not because there weren’t any Venture Capitalists or Private Equity firms interested, but because they wanted to allow customers to have the opportunity to directly invest in the equity.
“This was done to drive a higher degree of advocacy towards not just the company but also alternative funding platforms in general. After all, our members are our most important stakeholders,” said Calvin.
When raising funds through ECF, before the campaign actually goes live, the company is allowed to perform “pre-marketing” activities where they can gauge how successful the fundraising campaign will be.
“With Fundaztic having almost 9,000 members at that point, and with only a maximum of 4 million new shares issued via pitchIN, preliminary indication of interest was already about 11 million shares!” Calvin shared excitedly.
What’s In For 2019?
After such a successful round of funding, Fundaztic will be looking to triple their target in 2019 with a total disbursement of RM120 million.
“Therefore, we would need to gear up on our internal human resources by expanding both the front and back office capabilities and also continue on new system development as well as enhancements,” said Calvin.
Fundaztic will also be planning to introduce a “Secondary Market” on their platform, where investors can start trading their Notes for early exits by early 2019 as well as embark on an integrated mall concept with suitable partners to increase the level of activities permissible on the platform.
“Which in turn is expected to enhance loyalty and at the same time create new revenue streams for the company, benefiting not just members but also the shareholders,” he added.
Moreover, Fundaztic plans to continue forging more strategic collaborations with financial institutions and related agencies with SME developmental agenda to further narrow the financial gap and access to financing.
Above all else, they are looking at expanding beyond the Malaysian borders into the Southeast Asian region and beyond in the near future.
Feature Image Credit: Fundaztic