Startups and micro and small and medium enterprises (SMEs) will now have faster way of raising funds.
The Securities and Exchange Commission (SEC) said it has approved the first crowdfunding platform in the country — Investree Philippines Inc.
Investree will operate as a funding portal and act as a crowdfunding intermediary, subject to compliance with certain conditions. This will allow small, medium and emerging enterprises to connect with banks and other lenders, according to the SEC.
Investree’s registration as a crowdfunding intermediary and funding portal shall be valid for one year, “subject to a review by the SEC of the actual operation of the crowdfunding portal during the first 11 months for possible extension,” it added.
Investree is a joint venture between Filinvest Development Corp. and Investree Singapore Pte. Ltd. It is the first crowdfunding intermediary and funding portal to register with the SEC since the Rules and Regulations Covering Crowdfunding (CF Rules) took effect in July 2019.
Crowdfunding is a fundraising activity typically conducted through an online platform for startups and SMEs. It basically involves three parties: the entrepreneur or project initiator; the supporters or those willing to fund the business idea or project; and the platform or moderating organization that brings the entrepreneur and supporters together to realize the business idea or project.
Crowdfunding may be donation-based, where supporters pool their resources to support a charitable cause; or reward-based, where supporters give money in exchange for a “reward,” usually a product produced by the project initiator.
Crowdfunding may likewise be lending-based, where supporters lend money to the entrepreneur and receive his/her legally binding commitment to repay the loan at predetermined time intervals and interest rate; or equity-based, where supporters invest in shares sold by the entrepreneur and receive a share of the profits in the form of a dividend or distribution, subject to the entrepreneur’s discretion.
In Investree’s case, it will operate a lending-based crowdfunding platform, which will involve banks or qualified buyers as lenders, and will be limited to small, medium and emerging enterprises as borrowers.
The SEC said lending and equity-based funding activities under the crowdfunding platform will be exempt from the mandatory registration of securities as required under the Securities Regulation Code of the Philippines (Republic Act No. 8799).
“To promote capital market development and access to finance, the CF Rules provide an exemption from registration of CF securities provided that the issuer, intermediary and investors comply with the CF Rules,” it said.
