Generally, avid investors are keen on putting money into large companies through the stock market with the belief that the more well known a firm is, the more it is also reliable. There are several advantages to investing in big corporates as they tend to be more secure and there are usually many risk assessments as well as expert analysis to study from before making decisions. Additionally, there is a greater chance in profiting from an evolving business.
The growth of SMEs compared to large companies are especially interesting. SMEs have a compelling drive, and many could progress very rapidly. According to The Office of SMEs Promotion (OSMEP), from 2021 onwards — despite the impact of Covid-19 — they had expected a 2.4% growth (or a value of 5.94 trillion baht), which accounts to 34.6% of the country’s GDP. Moreover, they also predicted that in 2022, if we’re able to control the spread of the pandemic efficiently, there is potential that SMEs will grow further by 3.2-5.4%, or approximately 5.67-5.79 trillion baht.
Nonetheless, SMEs are often overlooked by investors, likely due to insufficient access to information and limited local platforms when it comes to the funding of small- or medium-sized companies. Hence, investors do not have adequate details in order to further inquire into new investment opportunities.
Crowdfunding: A Platform that Assists in Connecting SMEs with Investors
Crowdfunding is a business model created to assist SMEs that need financial funding to offer debentures. In Thailand, such fundraising can be initiated via Siam Validus, a trusted service provider that acts as an intermediary to connect SMEs that wants to raise funds with investors.
Using Technology to Evaluate the Quality of SMEs
An important role for crowdfunding platforms is to monitor SMEs that wish to raise funds while also doing necessary risk assessments so that investors could make better decisions. Siam Validus implements the same set of standards as financial institutions. Using advanced AI technology and a credit score system developed internally, the platform has an evaluation process that allows for well-rounded perspectives. Accordingly, investors are guaranteed more information to support each and every decision made through Siam Validus’ digital platform.
Other Advantages in Investing in SME Businesses
When compared to investing in big firms, crowdfunding requires lower funds to start with while investors will receive returns on their investments within a shorter period of time. As for Siam Validus, the minimum requisite is only 50,000 baht and the platform offers several investment periods — from shorter terms of 1-4 months to the longest term of 12 months. Therefore, investors have the freedom to manage their own finances without having to be concerned about any fluctuations that may be occurring in the market.
For reasons stated above, investing in SMEs through Siam Validus’s crowdfunding platform is considered to be as interesting as investing in large companies.
*Important remark: Investing in crowdfunding bonds is ideal for investors with knowledge and understanding of the risks involved. Investors should be able to make his or her own financial decisions, wherein the investment type is suitable for those who want to diversify their portfolio. With investment-based crowdfunding, investors should consider illiquid investments and investing until the maturity of the bond. Note that investment-based crowdfunding is not guaranteed by third parties and is not protected by any government agency. Thus, prior to any decision it is necessary that investors understand the nature of crowdfunding, thoroughly study its terms and conditions, and be prepared for any risk that may arise.