Zaar.com.mt, Malta’s first crowdfunding platform, has welcomed the ‘Feedback Statement to MFSA Consultation Document on the Future of Investment-based Crowdfunding’, published on October 6.
Zaar’s main mission is to help as many start-ups, projects and small businesses as possible, in their efforts to garner the finance they need to succeed. With this in mind, the platform welcomed the discussion paper when it was issued in November 2016, and has been eagerly awaiting the feedback in order to understand the MFSA’s position on the introduction of regulations for investment-based crowdfunding in Malta.
“The MFSA’s position to the industry feedback reflects the will of the authorities to move in the right direction,” said Zaar.com.mt manager Matthew Caruana. “However, we do feel that it is very cautious in its approach, and we are concerned that it is placing very high hurdles on the introduction of equity-based crowdfunding in Malta.
“Moreover, we feel that the feedback statement still leaves a number of questions unanswered and aspects that require further clarification. It also contains references to documents that have yet to be published.”
The MFSA appears to be taking a ‘one size fits all’ approach when it comes to funding, proposing a single-tier limit of €5million across all platforms. Mr Caruana added: “We believe in a more tiered approach, where campaigns below €1m, for instance, are treated differently from campaigns targeting €5m investments. This would subject platforms that offer services below the lower cap to less onerous conditions, whilst still delivering the checks and balances to protect investors.
“After all, crowdfunding campaigns have been particularly popular with start-up companies and small businesses, many of which aren’t looking to raise €5m, but typically €50,000 to €250,000.
“The Maltese financial market offers other financing options for companies that need to raise very high amounts, but does not offer accessible equity funding to those needing less than €1m. Thus, if campaigns for less than €1m are treated in the same manner as those targeting multi-million funding rounds, the costs will be too high and will render the campaigns infeasible.”
Mr Caruana went on to say that Zaar was eager to keep working with the MFSA to continue fine-tuning the consultation document, and to find a solution that works well for the Maltese crowdfunding sector, to the benefit of its clients and potential investors.
“Our aim is to make crowdfunding as accessible as possible for start-ups and businesses looking to raise from €50,000 to €250,000, at a time when they are not attractive to the Maltese banking market. We want to prevent excessively-high barriers to equity-based crowdfunding, whilst safe-guarding investor protection, and we are eager to work towards the best-possible schemes for the benefit of future users of crowdfunding in Malta,” he said.