29 January 2015

Crowd Funding Comes to Singapore - MoolahSense

In a previous post on Crowd Funding & Peer-to-Peer Loans, I had lamented that these services are only available in the US and UK. Singaporeans cannot take part in them as investors. But it looks like there is now a Singapore crowd-funding website providing Peer-to-Peer (P2P) lending service that has started operations - check out MoolahSense.

MoolahSense was featured in an article from The Edge recently. According to The Edge, the company had obtained clearance from the Monetary Authority of Singapore (MAS) and the Ministry of Law to proceed as a unique asset class after having engaged them for two and a half years. I imagine the complexity to get this going. On their website itself however, there is a disclaimer that this product/service is not regulated by MAS.

For the borrower, the minimum sum to be raised is $100,000.  The borrower needs to have at least one year of audited financial statements. MoolahSense would also conduct some level of background checks. For the investor, a minimum loan offered is $1,000. Only Singaporean residents are accepted as investors.

Essentially, the borrower starts a campaign to raise funds over a period of 30 days. Bids would be obtained from prospective borrowers and the lowest interest rates bid within the amount to be raised will be awarded.

There are of course no guarantees. Such loans from small-medium enterprise (SME) can fold up if the company go belly up, hence the high rate of interest offered. I view such loans as similar to junk bonds.

MoolahSense appears to have only started business not so long ago. There may have been only one campaign that has taken place and it may be facing difficulty getting more borrowers interested to come on board. Nonetheless, it has been extremely active in promoting their P2P platform at many events, and has even gone on to live TV such as CNBC.

Separately, SGX also appears to be working with a partner to develop the crowd funding market. Perhaps the scene will get livelier in time to come. Not sure if this option would be available to the retail investor though.

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