Fundaztic.com (Fundaztic), one of the leading peer-2-peer (P2P) financial platform, has embarked on offering investors peace of mind with the introduction of Principal Protect, an assurance to investors that they will not incur capital losses if investments are made per simple conditions set. This important move makes Fundaztic, the first and only P2P platform to offer capital protection of their own.
Investors are constantly faced with the fear of losing their money while making any investment decisions as all investment types, poses risks. The P2P financing industry is still at early growth stage in Malaysia but, globally, the industry has seen its fair share of defaults, write-offs and even platform closures especially in the more matured and larger markets such as the USA and recently China.
“P2P financing in Malaysia started just 2 years ago and is at its infancy. Hence, there is a pertinent need to provide added assurance for active members to further drive growth through TRUST. The industry being regulated by the Securities Commission (SC) since day one, already brings about a strong level of trust but we need to elevate this further as we grow,” said Jeffrey Chew, Chairman of Peoplender Sdn Bhd which fully owns and runs Fundaztic.com.
Principal Protect is able to enhance the investor trust and confidence of the Notes hosted by Fundaztic by ensuring that investors are not adversely affected and their investments are protected at all times as it compensates investors for the loss on principal amount incurred on the defaulted Notes or write-offs within portfolios made up of 100 Notes each.
Speaking at the launch of Principal Protect, Kristine Ng, Chief Executive Officer, further explained that, “Principal Protect does not require members to sign-up or opt-in. It is automatically provided as soon as the member meets simple conditions set. These conditions comprise of what we have been advocating all these while and that is to build a portfolio of at least 100 Notes, in as short a time as possible through diversification into all Note types issued and investing in almost equal amount to manage risks involved. Therefore, as long as a member has invested in at least 100 Notes and in amounts that do not deviate more than 3 times from the average amount invested per Note, the investor automatically enjoys Principal Protect.”
The feature is designed to provide an automatic reimbursement of sum lost on a monthly basis of up to RM30,000 against defaults and write-offs. This will give investors the desired confidence on the platform besides driving continuous investments that will in turn benefit more MSMEs hosted by the platform.
“We are committed to offer our investors protection on their capital and also give them the ease of mind knowing very well that at the very least, their investment capital will not be lost as long as they invest adhering to the criteria set to automatically enjoy Principal Protect. Fundaztic is proud to be the first P2P financing platform to provide protection and guarantee on a portfolio basis,” added Kristine Ng.
“By providing this protection, we are directly proving to the investors our level of confidence towards the quality of Notes hosted on the platform. Defaults and write-offs are expected of the segment of MSMEs that we are targeting to serve but we believe that the interest rates commensurate with the risks taken and despite observing defaults and write-offs, our investors should not be losing any capital at a portfolio level.” further added Jeffrey Chew.
P2P has proven to be a successful financial platform that has attracted the government’s interest. This is evident through its decision during the National Budget 2019 to set-up a co-investment fund and invest in P2P financing platforms.
“This move is a testament of the government recognising the strength of P2P financing. The government, as investors, would then earn returns and be able to reinvest in other MSMEs on a continuous basis This will then lead to more MSMEs gaining access to funding in a faster way,” added Kristine Ng.
The mechanism of Principle Protect is in tandem with Fundaztic’s brand promise to continuously innovate to enhance the value proposition and make funding and investment journey stress-free.
Principal Protect offers the opportunity for Elite members who have invested RM100,000 and above to be protected up to RM30,000. The non-elite members with investment of below RM100,000 and all other members will be protected up to RM10,000 based on the criteria below:
- Principal Protect has a built in mechanism within the system that will automatically kick-in with every 100 Notes in the member’s portfolio.
- The highest invested amount in a portfolio must not exceed three times the average investment amount per note. Example if the average investment for a portfolio of 100 notes is RM1,000 per note, only investments worth up to RM3,000 will be covered by Principal Protect.
“We believe with Principal Protect in place, investors of the P2P platform will be more receptive to investing in Fundaztic knowing that their investment capital is protected. In line with this belief, we are also taking the opportunity to enable the participation of millennials by reducing the minimum age for investors from 21 years old to 18 years old. This move would provide the opportunity for the millennials to begin investing earlier in an environment of manageable risks,” concluded Kristine Ng.
Fundaztic, which is a fintech (financial technology) start-up, is one of the first six P2P financial platforms that is licensed as a Recognised Market Operator (P2P Financing) by the Securities Commission of Malaysia. Malaysia is the first country in ASEAN to come up with full regulatory framework and guidelines to regulate this promising alternative funding and investment platform. To-date, the SC has granted a total of 11 licenses for P2P financing.
Fundaztic is founded by a group of prominent ex-bankers and a lawyer. It is a company with a paid-up capital of RM15.5 million and other principal shareholders include Mezzanine Ventures Sdn Bhd which is held 100% by Amcorp Capital Markets Sdn Bhd, which in turn is a wholly owned subsidiary of Amcorp Group Berhad and Benjamin Teo In October 2018, the company set a record in the local fundraising scene by achieving RM3million of funding through 64 investors in just 38 minutes via PitchIN.
As of end July 2019, Fundaztic hosted 763 investment notes on its website, with a total funding campaign of RM59.9 million and have disbursed RM55.2 million towards the 725 investment notes that have been fully funded.