For Prospective Investors

Equity crowdfunding is a method of raising capital in which businesses sell shares of their company to a large number of investors through an online platform.

ECF is an online fundraising platform for start-ups or micro, small and medium enterprises (MSMEs) to raise early-stage financing from a group of investors.

Investors who provide financing to the start-up or MSME via ECF will receive equity or shares from the company and will become one of the shareholders of the company. Over time, if the company’s business does well, the investor who is now a shareholder will benefit from either the potential dividend paid out by the company; sale of the shares to new investors or if the company becomes eligible to list on the stock exchange. 

ECF investment opportunities are open to all investors.

There are three types of investor categories:

1. Retail Investor
   • Refers to an individual who is not an angel investor or a sophisticated investor.
2. Angel Investor
   • who is a tax resident in Malaysia and Public (Umum) OR
   • whose total net personal assets exceed RM3 million or its equivalent in foreign currencies OR
   • whose gross total annual income is not less than RM180,000 or its equivalent in foreign currencies in the preceding 12 months OR
   • who, jointly with his or her spouse, has a gross total annual income exceeding RM250,000 or its equivalent in foreign currencies in the preceding 12 months.
3. Sophisticated Investor
   1. is determined to be a sophisticated investor  under the  Guidelines on Categories of Sophisticated Investors OR
   2. acquires any capital market product or Islamic capital market product offered or  traded on a recognized market where the consideration is not less than RM250,000 or its equivalent in foreign currencies for each transaction whether such amount is paid for in cash or otherwise

ECF represents an additional investment asset class where investors can have the option to diversify their investments beyond the traditional asset classes to suit their goals and risk profile. Remember to ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.

Refers to an individual who is not an angel investor or a sophisticated investor.  

Additional comment: most investors will fall into this category unlees you meet the criteria in the "angel investor" or "sophisticated investor" sections e.g. a net worth over RM 3 million. 

Refers to an individual—
(a) who is a tax resident in Malaysia; and
(b) whose total net personal assets exceed RM3 million or its equivalent in foreign currencies; or
(c) whose gross total annual income is not less than RM180,000 or its equivalent in foreign currencies in the preceding 12 months; or
(d) who, jointly with his or her spouse,has a gross total annual income exceeding RM250,000 or its equivalent in foreign currencies in the preceding 12 months.

Please refer to the full  Guidelines on Categories of Sophisticated Investors to see if you are a sophisticated investor. 

To help you in deciding whether you may qualify and check more details, here is a shortened list of potential qualification criteria: 

Sophisticated: 

High-Net Worth Individual (HNWI):

• Total net personal assets exceeding RM3 million, with primary residence not more than RM1 million
• Total net joint assets with spouse or child exceeding RM3 million, with primary residence not more than RM1 million
• Gross annual income exceeding RM300,000 or RM400,000 jointly with spouse or child.
•  Total net personal or joint investment portfolio exceeding RM1 million.
•  Relevant qualifications with five years' finance-related experience.
• Membership in specified financial associations

Accredited Investor:

• Unit trust scheme, private retirement scheme, or prescribed investment scheme.
• Bank Negara Licensed or registered persons
• Exchange holding company, stock exchange, derivatives exchange, approved clearing house, central depository, or recognized market operator.
• Corporation licensed or approved for regulated activities by Labuan or foreign authorities.
• Bank or insurance licensee under Labuan Financial Services and Securities Act 2010.
• CEO or director of licensed entities.
• Closed-end fund approved by SC.

High-Net Worth Entity (HNWE):

• Trust company with assets over RM10 million.
• Public company approved by SC as trustee with assets over RM10 million.
• Corporation with total net assets over RM10 million.
• Partnership with total net assets over RM10 million.
• Statutory body with investment mandate and assets over RM10 million.
• Pension fund approved by Director General of Inland Revenue.

PEP refers to "Politically Exposed Persons" i.e. individuals who are or who have been entrusted with prominent public functions either in Malaysia or in any other country in the world. 

In case you are a PEP, it is your obligation to mark yes to the PEP question in your user dashboard KYC section and/or inform Alixco immediately via email. 

In simple terms, a Politically Exposed Person (PEP) means a high-profile, political individual or individual entrusted with prominent public functions 

Examples are: 

• heads of State, heads of government, ministers and deputy or assistant ministers;
• members of parliament or of similar legislative bodies;
• members of the governing bodies of political parties;
• members of supreme courts, of constitutional courts or of other high-level judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances; #
• members of courts of auditors or of the boards of central banks
• ambassadors, chargés d'affaires and high-ranking officers in the armed forces;
• members of the administrative, management or supervisory bodies of State-owned enterprises; 
• directors, deputy directors and members of the board or equivalent function of an international organisation.

In case you are a family member or close associate of a PEP, you must also mark yes to the PEP question in your user dashboard KYC section and/or inform Alixco immediately via email. 

Family members include the following:

• The spouse, or a person considered to be equivalent of a spouse, of a politically exposed person; 
• The children and their spouses, or persons considered to be equivalent to a spouse of a politically exposed person
• The parents of a politically exposed person; 

Persons known to be close associates means:

• natural persons who are known to have joint beneficial ownership of legal entities and legal arrangements or any other close business relations, with a politically exposed person;
• natural persons who have sole beneficial ownership of a legal arrangements which is known to have been set up for the de facto benefit of a politically exposed person.

To invest in equity crowdfunding, you can sign up via the Register button on Alixco or log into your existing Alixco account, browse available investment opportunities via “Invest ECF”, and choose to invest in businesses that align with your investment goals. You will be required to fill out an investor notification/warning to determine if you are allowed to proceed.

In general, upon understanding and analysing the information disclosed by issuers concerning its business, financing purpose, financial information and risk information published on the ECF platform, an investor will then make an informed investment decision on the issuer, including the amount they wish to invest in.

Investors are advised to evaluate and understand investment risks before making any investment decisions. Investing in start-ups and early-stage businesses involves high risks, including loss of investment, illiquidity, lack of dividends and dilution, and it should be done only as part of a diversified portfolio.

The potential returns on equity crowdfunding investments can vary widely depending on the success of the business. While some investments may result in significant returns, others may not yield any returns or may even result in a loss.

Each issuer offers a certain type of shares to investors. This may be pure equity (direct shares) or preference share or a variety of it. ECF shares on Alixco are usually so called RCPS = redeemable convertible preference shares. Investors should always read the investment overview sheet to fully understand the characteristics, rights, opportunities and limitations of the shares offered.

Equity crowdfunding investments carry inherent risks, including the potential loss of the entire invested capital. Factors such as business failure, market conditions, and regulatory changes can impact the success of investments.

The amount you can invest in equity crowdfunding typically depends on your jurisdiction's regulations and the specific platform's policies. In Malaysia, retail investors are subject to investment limits set by the Securities Commission.

A person may invest in any issuer hosted on the ECF platform, subject to the following limits:

Investment Limit

Retail investor

Maximum RM5,000 for retail investors for a single investment and, no more than RM50,000 within a 12-month period

Angel investor

Up to RM500,000 for angel investors within 12 months

Sophisticated investor

No investment limit

Depending on your jurisdiction and regulations in your country of nationality and residence, non-Malaysian investors may be allowed to participate in equity crowdfunding campaigns. However, it's essential for investors to verify eligibility e.g. with a lawyer and/or tax advisor and comply with any applicable regulations in your jurisdiction.

ECF investors are given a six business days cooling-off period, within which they may withdraw the full amount of their investment. In addition, if there is any material adverse change relating to an issuer, the investors must be notified of such change.

When evaluating investment opportunities, consider factors such as the business model, market potential, management team, financial projections, and exit strategy. Conduct thorough due diligence and seek advice from financial professionals if needed.

In most cases, equity crowdfunding investments are illiquid, meaning you cannot easily sell your shares before the business exits or goes public. You may have to wait for a liquidity event such as an acquisition or IPO, which may take years or decades or may never be realized.

Tax implications vary depending on your jurisdiction, nationality and place of residence and the specific nature of your investments. Consult with a tax advisor to understand how equity crowdfunding investments may affect your tax situation.

It is important to highlight that investments in ECF issuers have NO GUARANTEE of return. Investments in ECF issuers are typically binary i.e. usually either leading to the loss of the entire investment or to attractive returns. Moderate losses or moderate returns may also happen but tend to be less frequent.

It is important to highlight that Alixco solely acts as a platform operator connecting issuers with investors and Alixco will not compensate investors for any losses or associated direct, indirect, incidental or consequential damages as a result of any investment made via the platform online or offline.

Alixco is required to adhere to regulatory standards and implement investor protection measures, such as due diligence on businesses, transparency in disclosures, and compliance with regulatory requirements.

The SC regulates equity crowdfunding (ECF) activities in Malaysia by registering the ECF operators (ECF operators) as recognised market operators pursuant to the Guidelines of Recognized Markets (RMO Guidelines).

The RMO Guidelines, among others, sets out registration requirements and imposes a set of obligations applicable to an ECF operator. Ongoing obligations imposed on an ECF operator include ensuring compliance with disclosure requirements and governance arrangements, carrying out due diligence exercise on prospective issuers planning to use its platform and ensuring investors’ monies are properly safeguarded.

Investors can report any complaint or dispute regarding the investment to report.misconduct@alixco.com and the complaint or dispute will be investigated immediately. Alternatively, you may lodge your complaint regarding your ECF investment by contacting the Consumer & Investor Office (CIO) of the SC.

Investors may incur fees such as platform fees, transaction fees, and performance fees. These fees can vary depending on each deal.  Typically Alixco charges ECF investor a small fee for transactions and a performance profit  fee of 10%  ( or between 0% - 20%) on any distributions or returns from ECF investments, which means investors typically get to keep between 80% to 100% of the profits made subject to taxes. Investor should carefully read each investment pitch to understand the costs and fees applicable for each deal.

Registered investors can access information about investment opportunities through the Alixco’s ECF portal, which includes current deals with details such as company profiles, financial projections, investment terms, and risk factors.

Equity crowdfunding investments are generally illiquid, meaning you cannot easily sell your shares on a secondary market. You may need to hold your investments until a liquidity event occurs, such as an acquisition or IPO. You may have to wait for a liquidity event such as an acquisition or IPO, which may take years or decades or may never be realized. 

Equity crowdfunding platforms offer a diverse range of investment opportunities across various industries and sectors. By investing in multiple campaigns, you can spread your risk and diversify your portfolio.

In the event of business failure or bankruptcy, investors may lose some or all of their invested capital. It's essential to assess the risk factors and potential outcomes before making investment decisions.

Issuers are expected to provide investors with regular updates on the progress of their investments, including financial performance, company updates, and any significant developments on a regular basis. 

If the business you invested in gets acquired or goes public, you may have the opportunity to realize returns on your investment through a buyout or the sale of shares on a public exchange. These returns can either be substantially negative e.g. a 99% loss or substantially positive e.g. a 100% or 1000% gain.