n recent years, the Indonesian public has been fed countless startup companies operating under the financial technology (fintech) umbrella. Although this presents opportunities to increase the financial inclusion rate, it turns out that many insincere startup companies have merely used such jargon as a marketing gimmick to induce hype from investors.
Despite such cynical statements, the fledgling fintech industry has been supported by the Financial Services Authority (OJK) through the introduction of equity crowdfunding based on OJK Regulation No. 37/2018. The framework was aimed at providing an alternative source of funding for startup companies besides the two-year old peer-to-peer (P2P) lending platform, so the OJK said.
The best and most concise way of describing equity crowdfunding is by picturing a public offer mechanism but for small-and-medium scale companies and minus all the complicated procedures (e.g., obtaining a registration statement, publishing brief prospectuses in newspapers, etc.). By not imposing the administrative burdens, the mechanism is predicted to be friendly to startup companies that do not have the adequate resources to comply with capital-market requirements.
Within the range of 12 months, a registered issuer at an equity crowdfunding platform is entitled to raise up to Rp 10 billion (US$716,000) in total equity from the public, as stated under Article 25 (1) of Regulation 37/2018.
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