Malaysia Prime Minister Tan Sri Muhyiddin Yassin has just announced that Conditional Movement Control Order (CMCO) will be extended till 9th June 2020. A lot of you may have feel the cash flow in your business is depleting especially if your business is greatly affected by the Movement Control Order since March 2020.
Are you struggling to fund your business, do you need cash flow to implement your business plan? Let’s look at what are your option like now: –
Private Investments into Private companies
Many businesses during this period, may increase funding by private funding through investments by private individuals, family office, private equity funds, investment funds or venture capitalist. A lot of capital is still available for private funding as the Investment companies have raised the funds before the MCO. We understand especially in Singapore there is many activities on acquisitions and investments by investment funds as the market valuation for private businesses is seen to be more attractive at this time.
Equity crowdfunding (RM1 investment by Government for every RM2 raised subject to a maximum of 1 million)
Equity crowdfunding is one of the fastest and cost-effective methods to raise funds from the public in exchange for ordinary and preference shares (Convertible or redeemable) shares in the company. Equity crowdfunding can offer several benefits to company and investor as follows:
Easier access to capital
Online crowdfunding platforms allow you to promote new business concept to the public and get ideally you get many small investments from many investors that can add up to a large amount of capital and pool of investors.
The process is cost effective as it uses online platforms to do the equity crowdfunding. The equity crowd funding companies that are licensed by Securities Commission Malaysia are Mystartr, PitchIN and others. Many of them do not charge the setup fee, provide advise before listing and take a small percentage of fee (5 to 7%) from the funds raised.
You are in control of the company valuation and setting the share prices. The most important is that there is no single investors that holds majority power. This will allow you remain majority interest in the control of your company.
Investors equal Customers
Some recent companies that raised funds thru equity crowdfunding was very creative in their offerings. Those in the food and beverages from crab, establish Chinese restaurants, retail organic food and services business have came out with investment returns thru cash dividends and vouchers to purchase goods and services at their premises. Some even offer advise time with the founders of the business.
On top of that some software companies and rental businesses have came out with innovative offerings of free subscriptions and rental for a period of time to investors.
It is important to determine the valuation method, consider the shareholding structures, terms and conditions of the shares, agreement with investors. After money has been raised, you should determine whether the reporting information is relevant to the investors as this is the most important communication tools between the company and investor.
We find the most value is the investors are either your existing or new customers who is encouraged to buy and promote the companies good and services they have invested and also enjoy the products and services.
Cheng & Co is the leading home-grown International Accounting Firm provide one-stop professional centre with innovative solutions for excellence. Our team is specialized in providing insightful advice to assist your company to get through the business difficulties.
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Northern Region (Perlis, Kedah, Penang, Perak) Mr. Albert Tan (email@example.com)
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