Getting to know the "Equity Crowdfunding" Platform in Indonesia

The concept of offering shares through crowdfunding or known equity crowdfunding (hereinafter referred to as ECF) began to emerge in Indonesia. Several platforms are starting to adopt this concept. As of December 2019, there are three startups that officially have OJK permits, namely Santara, Bizhare and CrowdDana.

In simple terms, the ECF platform exists to help businesses or projects to get funding with a joint mechanism. Then those who participate (investors) will get share ownership with an adjusted percentage.

As with investments, later those who "invest" their funds into a business or project will also receive the results. Of course with different results and risks.

OJK has issued regulations regarding ECF as stated in POJK Number 37 of 2018 concerning Crowdfunding Services through Information Technology-Based Stock Offerings. This regulation regulates the platform, investors, and the amount of money that can be collected from the stock offering made.

More about the ECF platform in Indonesia

Of the three services that have officially received OJK permits (as of December 2019), two of them have the same concept, namely Santara and Bizhare. Both open up opportunities for SMEs to offer their shares through the platform and raise funds. Looking for a different market, CrowdDana allows offering shares/investments in property assets to be more affordable.

CEO Santra Avesena Reza claims that they currently have the largest disbursement of funds, investor base and issuer. It's just that he did not explain the exact number of the three. However, Santara's optimism can also be seen from the plans they want to do in 2020.

Starting from strengthening portfolio management, strengthening risk management, distributing network, to linking technology, it is included in the list of plans to be executed.

"We made various improvements in terms of technology, such as from user experience, ease of access, integration with Dukcapil, collaboration with other technology actors. Use blockchain We also plan to implement it later this year, as a recording mechanism back office for all digital assets," explained Reza.

The same thing was also conveyed by the Founder & CEO Bizshare Heinrich Vincent. He said that until 2020 they already had 35 thousand investors spread across 34 provinces throughout Indonesia. The disbursed funds also touched the figure of IDR 27 billion with a total dividend distributed to investors of IDR 1,5 billion as of January 2020.

"The plan for 2020 is of course we want to help more SMEs in Indonesia to be able to experience the benefits and expansion more rapidly, by improving our analysis system, while providing education and assistance to them by utilizing digital technology. In addition, we will also launch features secondary market for investors, to be able to sell their shares, as well as other surprises that we will inform you of in the future," said Vincent.

Meanwhile, earlier this year CrowdDana announced that it had successfully funded two boarding house development projects. Its value reaches Rp. 14,6 billion and it is likely that by now it has been more. In the last interview with DailySocial, they mentioned that this year they will enter a new vertical, namely the food and service business.

"From the response of the community and business owners franchise, the demand is huge. From the financiers [community] side, investing in a restaurant or service business is also easier to understand, compared to property. From the publisher side [owner franchise], they want to expand their business but do not have access to financial funding," explained Co-Founder & Chief Product and Marketing Officer CrowdFunds Stefanus Iskandar Halim.

The possibility of the ECF industry getting busier is wide open considering that currently there are several that are in the stage of obtaining permits. One of them is Liquid, an ECF platform that offers share offering services for creative projects.

Appreciated regulations and ongoing education

Reza and Vincent appreciate the regulations issued by OJK. Both agreed that the current regulations are sufficient to protect the industry, for investors, platforms and businesses. However, coordination is still being carried out to maintain the relevance of regulations to conditions on the ground.

"Currently regulation equity crowdfunding In Indonesia, it is actually sufficient to take care of the needs of various parties, starting from the side of the Operator, Issuer or Investor. Although there are still many things that need to be improved, especially in terms of suitability to the needs of the perpetrators in the field," said Vincent.

Meanwhile, Reza said, "In principle, the issuance of POJK 37 is a pretty good step to legitimize that the activities carried out by the ECF platform have been approved by the regulator or the OJK, not fraudulent investments. The lack of complex rules directly related to the implementation of the ECF is a potential that can be optimized for the platform organizers to innovate/break through existing business processes."

So far, the challenge for ECF has been in educating the public and business owners. On the community side, there is an urgency to socialize there are other investment options besides gold, mutual funds, or shares on the stock exchange called equity crowdfunding. Including an understanding of regulations and existing risks.