1. Startups

Getting to Know ALUDI, the Association of Equity Crowdfunding Actors

ALUDI already has 22 members, 4 of whom are licensed by the OJK Capital Market Supervision

Talk about equity crowdfunding (ECF) --formally known as crowdfunding through stock offerings-- is talking about high compliance with regulations. As one of the business models with new innovations, regulators in Indonesia are quite strict in overseeing this crowdfunding business. This is also one of the reasons for its establishment Indonesian Crowdfunding Service Association (ALUDI).

ALUDI appointed by Financial Services Authority (OJK) Capital Market Supervision as the official crowdfunding association since mid-December 2020 through OJK letter No.S-153/PM.22/2020. Listed start-ups include Santra, Bizshareand CrowdFunds; listed as the founder of this association, while the chairman position is occupied by the CEO of Santara Reza Avesena. The three startups are organizers of the crowdfunding business through the first licensed share offering in Indonesia.

Reza said that ALUDI was established to increase the potential of the crowdfunding market in the country. As a relatively new business, Reza assesses that the presence of strong new players is needed to expand the market and at the same time introduce crowdfunding products to the wider public.

"In terms of our platform, competition, in terms of our community, we collaborate in the form of raising" market, give each other benefits, and with this association when other organizers enter, we can take care of it," said Reza.

Maintain compliance

What is meant by "maintaining" by Reza is ensuring the compliance of new ECF players with applicable regulations. Reza and Santara really feel the importance of complying with these regulations. At the beginning of its operation, Santara was hit by the OJK syringe because the regulations governing the ECF did not yet exist. As a result, Santara had to stop operating temporarily.

Reza did not want the bitter experience to be experienced by his colleagues. In addition to having a negative impact on business continuity, violating regulations can also tarnish the public trust that is being fostered by this industry.

The association is also planned to take on a role in screening new players. Reza assesses the possibility of an organizer experiencing default still there. If the worst case scenario occurs, it will not only tarnish the reputation of the industry, but also disrupt the smooth running of SMEs on the stock exchange.

"With the existence of ALUDI, we are very careful with all the organizers who get permits so that there are no fraudulent organizers who can actually lose public trust."

In total, there are 22 members in ALUDI, 4 are licensed and 17 are still in process at OJK to become ECF organizers. LandX was the last name to get an OJK permit.

Permission expansion

Not long ago the association also received good news following the publication POJK Number 57 of 2020 which govern crowdfunding securities (SCF) -- formally called securities offering through crowdfunding. SCF is a business expansion of ECF. The difference with ECF, the business entity that can do crowdfunding is not only limited liability companies or cooperatives. This means that business entities such as CV, NV, firms, and others may participate in crowdfunding in the capital market.

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The government officially launched SCF at the opening of stock exchange trading last week. The presence of SCF adds alternative financing for SMEs and startups. In response to this, ECF organizers are competing to expand their license to be able to offer SCF products to the public.

"Currently, ECF operators who already have permits are expanding their permits to be able to comply with POJK 57/2020," said Reza.

The market potential of ECF and SCF can be measured by the number of MSMEs which is estimated to reach 60 million. In order to pursue this potential, ALUDI has a lot of homework to do to encourage the growth of SMEs, improve public financial literacy, maintain public trust, and bridge the lack of talent in the financial industry.

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