The first technology-based crowdfunding platform has been authorized by the Securities & Exchange Commission of Pakistan (SECP), the country’s financial regulatory agency, to begin live testing under the first cohort of the Regulatory Sandbox.
Crowdfunding is a digital setup that offers start-ups and SMEs the ability to collect funds from investors in exchange for securities.
Recently, SECP tweeted, “The approved Crowdfunding Platform would conduct requisite due diligence on behalf of investors so that only eligible issuers, meeting threshold criteria, pitch the issue through the crowdfunding platform and raise funds from investors.”
The business model of Crowdfunding will be operated / tested for 6 months in a live-controlled environment under the supervision of SECP.
In order to gain approval, the applicants must comply with the conditions laid down by the SECP. At the end of the test period, the applicant must send to the Commission a detailed report on the fund-raising activities carried out by the platform, which will then decide the future course of action for the regulation of crowdfunding platforms in Pakistan.
For years, crowdfunding platforms such as Kickstarter and GoFundMe have been a source of funding for start-ups and are a common way of attracting investment from around the world, and this facility can now also be used locally by Pakistanis.
