SEC expects rise in SME crowdfunding

Small and medium-sized enterprises (SMEs) and startups are expected to increasingly turn to crowdfunding platforms to raise capital and take advantage of an investment boom as the impact of the pandemic wanes, according to the Securities and Exchange Commission (SEC).

SEC secretary-general Ruenvadee Suwanmongkol said the regulator continues to support SMEs and startups' ability to access funding on Thai capital markets and, more recently, through crowdfunding platforms.

The SEC allows small businesses to raise funds from the public on crowdfunding platforms through both equities and debt instruments. The regulator also allows private placement-SMEs (PP-SME) through newly-issued shares or convertible debentures.

The SEC legalised raising capital through crowdfunding for SMEs in 2018 and requires firms to raise funds through crowdfunding portal companies that are licensed by the SEC. These companies will serve as a financial adviser and underwriter for a fundraising campaign.

Since 2019, only 22 businesses received funding through these platforms for a total of 128 million baht, while nine companies have raised funds through PP-SMEs, totalling 194 million baht.

Ms Ruenvadee said SMEs account for over 43.2% of the country's GDP and employ as many as 12 million people and can serve as a vehicle for reducing social inequality.

Thasan Bureechana, chief value officer at Sinwattana Crowdfunding, said the company received its licence to operate in 2018 by the SEC and raised funds for its first project the following year. The company raised 40 million baht last year in capital for SMEs, of which 10 million baht was raised through donation-based and reward-based crowdfunding.

He said this year the company has many projects in the pipeline and appeals to businesses having difficulty accessing loans from commercial banks, as these banks require loan collateral and income requirements.

Vorapon Ponvanit, chairman and chief executive of PeerPower Platform (another crowdfunding portal company) said 14 companies raised a total of 54 million baht on its platform in 2020, while nine companies have already raised 116 million baht since the beginning of 2021.

According to Mr Vorapon, the company has not yet reported the latest figure to the SEC.

"There are many firms in the pipeline interested in raising funds through crowdfunding platforms, we expect this to continue growing this year."

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