The potential of sharī'ah-compliant equity crowdfunding as a source of fund for new entrepreneurs in Malaysia

• Main Authors: Edy, Muhammad Hafidtz, Hasan, Aznan, Kassim, Salina
• Other Authors: Haron, Razali
• Format: Book Chapter
• Language: English
• Published: IIiBF, International Islamic University of Malaysia 2019
• Subjects: BPH Islamic Economics; H Social Sciences (General)
• Online Access: http://irep.iium.edu.my/89834/1/89834_The%20potential%20of%20shar%C4%AB%27ah-compliant%20equity.pdf; http://irep.iium.edu.my/89834/; https://islamicmarkets.com/publications/islamic-fund-wealth-management-a-way-forward

Equity crowdfunding has become an increasingly popular fundraising method used particularly to assist new entrepreneurs or start-ups in establishing their projects. It operates using internet facility by leveraging on social networking sites to raise capitals. In the Islamic finance industry, equity crowdfunding is considered to be a relatively new area yet possesses high growth potentials as it is greatly in line with the spirit of the industry. This study seeks to explore the potentials of a Sharīʿah-compliant equity-based crowdfunding as a tool to raise funds for entrepreneurs to support them in initiating their business projects. By adopting a qualitative research method through content analysis, various types of crowdfunding models that are available in the market are highlighted in which their suitability are assessed in the context of the Islamic finance industry in Malaysia. The study also sets out the latest legal framework and guidelines governing the equity crowdfunding industry in Malaysia. It is also found that more than RM30 million of capital has been raised by different enterprises since the registration of six equity crowdfunding operators by the Securities Commission Malaysia in 2015. Hence, there is a huge potential for Sharīʿah-compliant equity crowdfunding to tap into the market provided that additional adjustments on its regulations pertaining to the aspects of Sharīʿah aspects are incorporated.