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Crowdfunding spurs optimism for small businesses
Funding for small businesses through securities crowdfunding (SCF) platforms tripled in 2021.
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Securities crowdfunding mobile app Bizhare (Courtesy of Bizhare/-)
I
nvestment through securities crowdfunding (SCF) platforms tripled in 2021, according to an industry association, signaling a growing interest in small and medium enterprise (SME) funding.
Indonesian Crowdfunding Association (Aludi) vice chairman Heinrich Vincent said total funds disbursed to SME issuers had reached Rp 412 billion (US$28.7 million) last year, handily exceeding the association’s prediction of Rp 300 billion.
He also said that due to exponential industry growth, the association had set a target to disburse Rp 500 billion in funds to SMEs in 2022.
“Investors had been putting their money in safer investment instruments like deposits during the [first year of the] pandemic, but last year, people were looking for instruments that are riskier but give higher returns,” Vincent told The Jakarta Post on Friday.
The reason for the uptick, he said, was the easing of public activity restrictions (PPKM), which had driven SME business activity and thereby revived investors’ confidence in the segment.
He added that depending on the industry, SCF could offer 10 percent to 50 percent in annual dividends, far higher than around 2 to 3 percent returns on bank deposits. Some food and beverage (F&B) players, he said, were offering up to 30 percent yearly return.
Securities crowdfunding allows SMEs to offer investors equity, debt papers or sukuk for funding of up to Rp 10 billion for a period of 45 days through crowdfunding agencies.
