SEC Still Optimistic Amid Crowdfunding Challenges

The Securities and Exchange Commission (SEC) remains bullish on the potential of digital crowdfunding platforms, despite encountering a few bumps along the road.

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Emilio B. Aquino, the SEC chairperson, candidly addressed the media about the challenges faced:

"We experienced birth pains. That’s the same case for the other jurisdictions like Indonesia and Malaysia. It’s the same. So we’re sorting it out but that does not mean that we’re closing the doors as far as the use of digital platforms are concerned."

The SEC has been a staunch advocate for crowdfunding, promoting it as a viable and accessible capital-raising avenue for micro, small, and medium enterprises (MSMEs) and startups aiming for business expansion.

Crowdfunding, a fundraising activity typically conducted by startups and SMEs, allows the public to support or fund a business idea through an online platform. Emilio emphasized the importance of digital crowdfunding platforms:

"We want them to tap, especially the digital platforms because the whole idea is that it will allow the SMEs also as source of capital raising opportunities for them."

In the Philippines, three licensed crowdfunding intermediaries currently operate: SeedIn Technology Inc., Investree Philippines, and Eastern Securities Development Corporation. However, Investree, the country’s pioneering crowdfunding intermediary and funding platform, recently announced its decision to cease operation.

Filinvest Development Corporation (FDC) has announced that its subsidiary, f(dev) Digital Innovations and Ventures Inc., in agreement with Investree Singapore Pte. Ltd., will commence the wind-down of Investree Philippines. The company plans to apply for a reduction of its corporate term to conclude by September 30, 2025.

Since its inception in 2020, Investree Philippines has supported over 180 businesses and funded more than 800 applications across various industries as of 2023.

Meanwhile, the SEC has initiated a special audit on SeedIn following concerns about potential fraud committed by its former president, Edison Tsai. SeedIn reported Tsai’s involvement in a possible fraudulent act.

Emilio B. Aquino remarked:

"Most definitely we learn from the reports, the audits that we conduct to plug those possible loopholes. We are checking that. But right now, it’s under review"

        

According to SEC regulations, SMEs engaging in crowdfunding no longer need to register securities with or secure approval directly from the SEC before soliciting investments from the public.

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