(24-03-2016, 01:11 PM)Triple70 Wrote: [ -> ] (24-03-2016, 12:13 AM)Raks Wrote: [ -> ]I actually agree with CityFarmer and weijian. What I meant was there's still no truly "crowd funding" for the retail, mass market.
Start-up funds for techies - Singapore already made a handful of young multimillionaires who did tech start-up. And every kids doing start-up seriously should be able to reach all this angel investors/mentors - there're many helps/guidance/network to link start-ups to venture capitalist and mentors.
And guess who's taking up the Grade A offices in Raffles after banks moving out? Start ups.
The "crowd fund" that I wish to see is something more humble and down to earth. Something similar to the micro-financing in India. Provide financing to a woman with no asset to buy a cow/sewing machine; and let her repay in years.
These crowdfund business startup should be meant for something as humble as start up money to sell Wantoon noodles or a car-wash kiosk under PIE, the financing required could be $20k.
The essence of crowfunding to me is; bottom of the pyramid (BOP) folks financing BOP folks for a win win situation.
You are not Accredited Investor, can't invest in Uber? Lend me $1000 for my Chicken rice stall for 2 years and I will return you $1300 in 2 years.
Or "crowd fund" a kid who has already gotten a scholarship to go overseas - he can't go because his poor family needs a bread winner now, not a scholar. This kid can securitize and sell 10% of his first 5 years net income after graduate, or payback the amount + prime lending rate, whichever is higher.
Another thing I want to see is "crowd funding" for skill-upgrading. Gov subsidize many courses for Singaporeans, one needs to pay only, say $400 for a $5,000 dollars course. If a low income earner could attend this course, the increment he receive after the course would be very significant. However, a figure like $200, or $500 is still a hurdle that low income earners find it hard to cross; as ridiculous as it sounds to the median $9000 household income folks.
For example, loan $200 for skill upgrade and let him repay in 24 months. That would be $10 per month instead of $200. This is significant for a worker who makes $1500 a month, before CPF.
These are not charity.
There are many ppl who need funding, but the reality is that investors need assurances that the investment is credible.
Due diligence cost $, legal recovery of bad debts is also costly. The fixed costs being so high.. naturally the amt loaned has to be pretty substantial to justify the risks.
Are there investors willing to invest based purely on blind faith? We can actually test this idea out. Anyone wanna try?
I really do need 700K for 2 years willing to pay a cost of capital (all in) of max 8% interest, no due diligence possible, and don't have any feasibility study to show. Any one keen to lend? Personal guarantee can be provided.
What I mentioned is not blind faith and definitely not without due diligence/Risk management.
Due diligence and risk management is never the amount of money you have spent assessing. Some business is easier to asses than others
As the person giving out money expecting it back with interest, I will look at how can you pay back the money and how can I hurt you when you don't pay me back. That's my dd and rm.
The example I gave, $10 repayment by someone with take home 1200, that's 120x coverage. What's the chance of default? In a "logical to someone else" manner, that's the someone having take home cash of $120,000 failing to pay his car installment. One characteristic of micro financing is very high interest rate, very low default rate. Debt-to-service ratio.
700k for 2 years, personal guarantee doable if I know your earning power - interest we can talk later. If you have yet to earn/owe that in you whole life, your personal guarantee is very, very, not useful. What's the point of making you a bankrupt if you can't pay anyways. DD is done before giving out the cash.
If 700k is your 10 months income, 8% interest upfront for 12 months; exceeding 12 months, 24% p.a..
If you want $70 to buy a book called "The fortune at the bottom of the pyramid", willing to repay me $100 in 12 installments, aye, lets do that as long as you are employed.
Corporate guarantee? That's worse, I can't even hurt you.
If you are able to owe enough money, the bank would not want you to go bankrupt. The bank would continue to provide you with financial support, loan you more money and even give you free business consultancy, if you owe them an amount that you can never repay by working 9-5. The bank will make sure you are successful so that they can recover as much as possible.
There's this thread "if you're loaded, consider private equity" started in vb as early as 2011.
Bottom of pyramid is most suitable to do in service, web2.0, manner. Operation cost such as distribution, management and marketing for Alibaba, AirBnB, eToro... would be prohibitive without technology.
Startups before crowdfunding platform prefer 5 angel investors each giving 100k than 1000 people each giving $500 (have 1000 copies of contracts? manage 1000 accounts to pay the 5% interest of $500? Hire a investor relationship manager in startup? seriously?).
Crowdfunding should have more variety than those "web version of the exclusive angel investor club". To me, Moolahsense has more "crowdfunding" spirit vs Fundedhere.
If the choices remain "not-regulated by MAS" vs "regulated, for AI only", what has improved for crowdfunding?