SCF FundEx Startup Officially Operates, Aims for Digital Business to Get Alternative Funding

FundEx enliven the ranks player crowdfunding securities (CFS) in providing alternative funding for SMEs, as well as investment alternatives for retail investors. This startup has obtained a business license from OJK as of September 6, 2021, it is planned to inaugurate itself to the public at the end of October 2021.

FundEx was founded in 2019 by Agung Wibowo, Purwanto, and Tri Mukhlison who are fellow alma maters at the University of Indonesia. Initially they were moved to build a funding ecosystem for startups, after receiving socialization about equity crowdfunding (ECF) from OJK. Then in 2020, OJK refined the ECF rules to become SCF through POJK 57, as well as replacing the previous regulation, namely POJK 37.

“With the enactment of POJK 57, FundEx's business model has changed. FundEx can not only offer equity securities, but also debt securities, namely bonds and sukuk," said FundEx Co-founder and CEO Agung Wibowo to DailySocial.id.

He continued, compared to similar players, the differentiation offered by FundEx is that they are more specifically looking for creative and innovative digital businesses with high, even exponential growth. “Investing in startups is an advantage FundEx has, where other SCF players are not taking the market.”

Through FundEx, businesses can get funding ranging from IDR 1 billion to IDR 10 billion. The public as retail investors will get share ownership from businesses in the form of startups, so they have the opportunity to get dividends and even capital gain which is exponential.

Meanwhile, businesses in the form of MSMEs, such as boarding houses, restaurants, mini markets, will receive dividends sharing regularly, at least once a year. There is also a business in the form of a project, which allows retail investors to get a share of the profits from the project.

Risk mitigation

Each type of business has different investment instruments, some are equity securities (EBE) to invest in startups and MSMEs. Meanwhile for the project-type business, the investment instruments are bonds and sukuk, which are debt securities (EBU).

The three investment instruments that FundEx offers can be an alternative investment and diversify for investors according to their respective risk profiles. In accordance with OJK's encouragement, investors who have an income of less than IDR 500 million/year can only invest 5% of their total annual income. Meanwhile, for those with an annual income of more than IDR 500 million, they can invest between 5%-10% of their annual income.

In addition to the business side itself, FundEx also takes mitigation steps before a business can raise funds. Agung explained, for EBU, security is more secure than equity because debt must be returned. "We have to make sure that the publisher has the ability to return it."

For the security aspect, the company cooperates with insurance companies, and asks for guarantees. While for EBE, generally there are those who ask for dividends sharing and capital gain. If anything leads to dividends sharing, FundEx will play in property management, so there must be asset control.

"It's good that we can use property as an asset in the company. So, for example, if the company goes bankrupt, we can liquidate the assets and return them to the investors.”

He continued, for investments in startups that fall into the high risk category, the curation process will be much more stringent. Therefore, FundEx will be more selective and securities of this type will be issued in a limited manner, around three to five startups per year.

“Because we believe that this startup does not have many assets to pledge, does not have land ownership, and so on. What we can rely on is how their prospects in the future. In addition, we will also pay close attention to the startup team or founder. Do they have financial problems or not.”

According to him, all these indicators can be monitored through the Credit Information Management Agency (LPIP), which has collaborated with FundEx. "From there we can see whether the startup has a bad financial record or not."

Agung said, in order to accommodate more businesses to obtain alternative funding outside of banking. For this reason, his party will continue to approach publishers, associations, and business communities. “For debt securities, FundEx will play a lot in the construction sector, especially for projects that already have SBK guarantees from the government, which we consider safer in terms of risk.”

Given that the company can only operate after obtaining a permit, so far the company has received applications from more than 100 publishers. Of these, there are two publishers who have passed the due diligence (due diligence). “At the end of this month [when grand launch] we will launch two publishers already ready to invest," concluded Agung.