The Bhutanese Leading the way.
Bhutan Crowd Funding, initiated by the Royal Securities Exchange of Bhutan (RSEB) and supported by the Royal Monetary Authority of Bhutan, is licensed to operate the first crowd-funding portal under the Crowd Funding Rules and Regulations 2019. The license was issued during the BEFIT 2019 under the theme of catalyzing CSI to drive Bhutan’s Economic Diversification.
There are different types of crowd funding, like donation-based and reward-based but the type of crowd funding that Bhutan has is that of equity crowd funding, although the CEO of RSEB said that they are working on the other two types as well.
The reason why equity crowd funding was chosen, according to the CEO is, ‘’We have entrepreneurs with brilliant ideas and have even come up with products, and wishes to scale up their products, but unfortunately they do not have the requisite fund nor do they have the collateral to pledge against the loan from the banks, so what we immediately thought was that equity crowd funding is what our entrepreneurs needed for a start to bridge the finance gap.”
There are three companies namely, Bhutan Alternatives, Freelancer Bhutan and Himalayan Food, out of which, Bhutan Alternatives successfully completed crowd funding campaign by raising Nu 8, 340,000, which is 30 percent of the total stake of the company, from forty-one investors before its deadline.
Bhutan Alternatives was listed in the Bhutan Crowd Funding portal after two weeks of comprehensive discussion, emendation and anatomization with a review team from the RSEB.
Nonetheless, not all start-ups or small ventures can easily register with the crowd funding campaign for raising funds unless they have a prototype.
The CEO of RSEB added, ‘’We cannot open for every company because we cannot afford to check the background of each and every entrepreneurs that come to us with ideas, so therefore, one of the criteria we have decided is that they should have a product – because having a product would mean they are very serious since they have actually worked on it. And the second thing is the product should be saleable since you cannot just have limited product which is just for limited market as it should rather have a future market prospect.”
The idea for the crowd funding platform, according to the RSEB CEO is, “A day might come when one would not need banks or stock markets so the best thing is to embrace technology, and work to our advantage since whether we accept it or not; technology is proving to be very disruptive even in our country so we need to utilize whatever we can at its best. Crowd funding is one of the few initiative that will change or shape the dynamics of financing, and I hope that all the aspiring entrepreneurs will keep in mind that we have such a platform and take advantage of the platform.”
RSEBL took over 9 months to develop the online crowd funding platform and the challenges were trying to work on appropriate design and integrating it with a payment gateway. The system for payment gateway is a totally different system so it took time to integrate, the CEO said, “It (payment gateway) was worth it because our main objective is to ensure that the young entrepreneurs do not go empty handed and it is convenient for the investors by using technological platform.”
CEO also added that, ‘’The entire exercise of RSEB is help bridge the funding gap because ultimately if these companies do well, we are opening a gate for them to come and list down as stock exchange so they are our prospective client in the future as they grow big.”
The beauty of crowd funding is that an investor investing in a company won’t be affected much or even bear much financial implication in terms of their personal finance if the company does not fare well. RSEB is trying to provide an investment avenue for the crowd so that the entire crowd can participate in the company ownership and for the promoter who has initiated the entire campaign in crowd funding. Using technology which is seamless is another beauty because with your phone you can conveniently subscribe, said the CEO of RSEB.
