Hong Kong Gets Its First Equity Crowdfunding Platform, Well Kinda

Hong Kong Gets Its First Equity Crowdfunding Platform, Well Kinda

by April 30, 2019

Earlier this week, South Morning China Post reported that Hong Kong’s Securities and Futures Commission has issued its first equity crowdfunding license to AngelHub.

As someone who is actively keeping track of the scene, I received this news with much enthusiasm. Equity crowdfunding is both an excellent alternative for startups seeking capitals and retails investors seeking to access high potential early stage startups.

But there’s a caveat.

It resembles equity crowdfunding, but only to an extent.

At the risk of sounding pedantic, SFC didn’t exactly issue an equity crowdfunding license to Angel Hub, instead the platform is granted two licenses on 1st April 2019 to deal in securities and perform advisory functions.

The newly licensed platform doesn’t allow for retail investors to participate in its rounds. It is limited to professional investors, which defined in Hong Kong rules as individuals with an investment portfolio no less than $HKD 8 Million (US$ 1 Million) among many other criterias.

This seems to go against the very spirit of equity crowdfunding. At its core equity crowdfunding is supposed to provide investment opportunities to the common folk in a space that was previously only accessible by angel investors, and venture capitalists.

The platform also told South Morning China Post in the same interview that only 5% of startups that will be introduced to investors, which again seem to go with the raison d’etre of equity crowdfunding, which is to provide startups an alternative to the traditional route.

Don’t get me wrong, there’s nothing wrong with the value proposition that Angel Hub is offering. If anything Angel Hub will likely help a select few high-potential startups gain access to investors, and should be lauded for it — it’s just not exactly accurate for it to be labelled as equity crowdfunding in its current form.

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