SEC looking at pushing crowdfunding to help startups

The commencement of the public-hearing process might start this year, Vorapol Socatiyanurak, secretary-general of the SEC, told The Nation recently.
The regulator’s role is to promote access to funds for companies through the stock market.
Large and strong firms can raise money from the public via an initial offering of shares (IPO), so the SEC was now turning back upstream where very small companies, which have ideas for innovative products, are seeking liquidity.
However, they are at a very early stage of development with lots of risks and are not attractive enough to venture capitalists. Crowdfunding, which is a platform that helps creative start-ups appeal for funds from interested people via the Internet, is now being studied by the SEC and is expected to be introduced in the country.
Typically, entrepreneurs have no need to file an IPO proposal and are not required to show a track record like those seeking to be listed on the stock exchange. They just post their business plan and capital requirement on a web portal designed for the crowdfunding service. Then they are given funds from those who are interested in their ideas with no expectation of returns.
However, the start-ups might give them one of their products, if they are successful. “We need to build up a mechanism of funds creation [in the primary market] for start-ups, say those with an investment of less than Bt20 million per project,” he said. However, control of crowdfunding portals would be needed to protect donors from outlaws pretending to be a start-up to get money.
Statistically, crowdfunding would take about three months versus about six to 12 months for venture capital. A survey found that 28 per cent of funds successfully raised by means of crowdfunding were later extended by venture capital funds. Crowdfunding has been popular in North America and Europe for several years.
Out of the US$2.7 billion (Bt88 billion) successfully rustled up worldwide, $1.6 billion was in North America and $950 million in Europe. Thai small and medium enterprises (SMEs) numbered almost 3 million and crowdfunding could help them raise funds. From start-ups, they could grow into a listed company.
The SEC also plans to help SMEs access capital more easily by listing on the bourse’s special board with few requirements.
Only cash trading will be allowed and auditors will be specifically created for these SMEs.
New requirements for SME listing are being drawn up and are expected to be announced soon.
As for the “IPO, Pride of the Provinces Project”, Vorapol said this was a successful initiative that could encourage potential companies in provinces nationwide to list. There are 300 companies and 500,000 persons joining the project.
“Companies based in the provinces account for 7 per cent of total listed companies,” he added.