Small and medium enterprises, or SMEs, are the backbone of Asian economies, according to the Asian Development Bank. In the Philippines, SMEs make up 99.6% of all registered businesses and 70% of the labor force, creating jobs for an estimated 3 million Filipinos.
Despite SMEs' big contribution to the labor force and to the growth of the Philippine economy, they are hindered from achieving their maximum potential due to a lack of additional working capital, among other reasons. As an investor, you play a crucial role in their development and growth. Investing in SMEs through a crowdfunding platform offers opportunities for SMEs to expand and develop, leading to a more dynamic and growing economy.
This article discusses how investing in SMEs through fintech crowdfunding platforms is positively impacting and driving change in the Philippine economy.
What is crowdfunding investment, and how do investors benefit from it?
In recent years, the Philippines has witnessed a tremendous surge in fintech adoption. One of the recent emerging financial technologies in the country is crowdfunding. It is a concept that entails raising funds for a project, venture, or cause by accumulating contributions from a large number of individuals, typically through an online platform.
Crowdfunding, in the concept of business financing or business loans, can take various forms, and one of the most popular forms in the Philippines is debt crowdfunding. Due to its accessibility, efficiency, and potential to democratize investment opportunities for investors like you, this strategy for raising additional working capital has garnered significant traction for SMEs who are looking for alternative business financing options.
With the current traction that these platforms are gaining, investing in SMEs through fintech crowdfunding platforms can provide you with a variety of benefits. Here are some procedures by which you can profit from your investments in SME crowdfunding:
1. Diversification
Crowdfunding platforms enable investors like you to diversify their portfolios by contributing to a variety of initiatives and businesses. Instead of concentrating their capital on a single investment, investors can allocate it across a variety of enterprises. As gains from other investments can offset losses from one, this diversification lowers risk.
2. Access to high-potential ventures with prospects of higher returns
Numerous SMEs seeking additional business funding or business loans through crowdfunding platforms are innovative ventures with substantial growth potential. By investing in these businesses, you gain exposure to future opportunities with the potential for high growth and substantial returns. As these businesses grow and scale, the value of an investor's stake in the company can rise.
3. Alignment with core values
Investing in SMEs through crowdfunding platforms enables you to select projects that align with your values and interests. This allows you to support businesses working on solutions you believe in, which contributes to a greater sense of purpose and satisfaction than monetary gains alone.
4. Stimulating local economies
Crowdfunding investments in local SMEs can have a positive impact on the local economy by creating employment, fostering innovation, and contributing to community development. You can take pride in the fact that your contributions directly benefit your communities.
5. Availability of variable investment amounts
Crowdfunding platforms enable you to invest in SMEs in different sectors and industries since you have the power to only fund a portion of the capital that the SMEs require for their businesses.
6. Democratization of investment
Crowdfunding platforms democratize investment opportunities by enabling individuals or investors who may not have had access to conventional investment channels to participate in the expansion of promising businesses or ventures.
7. Knowledge and experience
Crowdfunding provides you with the opportunity to learn about diverse industries, business models, and market trends by investing in SMEs, which can be beneficial for improving your overall financial literacy.
How do crowdfunding investments positively impact the Philippine economy?
Not only is crowdfunding investment an alternative investment opportunity or another option to diversify your portfolio, but it also has the potential to transform the Philippine economy in a number of ways:
Crowdfunding investment has the potential to transform the Philippine economy in a number of significant ways.
1. Capital availability for SMEs
SMEs are vital to the Philippine economy, but many of them experience difficulty gaining access to traditional bank and financial institution financing. Crowdfunding offers a viable alternative for SMEs in need of capital for development and expansion. In turn, this encourages entrepreneurship, stimulates innovation, and contributes to a rise in economic activity.
2. Job creation and economic development
SMEs are major job creators, especially in the Philippines, where there is a dynamic labor force. By facilitating the growth of SMEs through crowdfunding investments, more employment opportunities are created in a variety of industries. As these companies develop, they hire a greater number of employees, which reduces unemployment and contributes to economic expansion.
3. Financial technology progress
The Philippines' implementation of crowdfunding as a fintech solution demonstrates the technological development in the country. This promotes an innovative culture and the growth of a flourishing fintech ecosystem. As an increasing number of investors and entrepreneurs utilize crowdfunding platforms, the fintech industry strengthens, which attracts additional investment and talent.
4. Financial participation
Crowdfunding makes investment opportunities accessible to a larger population segment. The SEC's rule on qualified institutional or individual buyers (QIBs) or investors who want to invest in fintech crowdfunding platforms for SMEs promotes financial inclusion and enables more people to profit from the expansion of SMEs.
5. Region and industry-specific development:
Crowdfunding investments may help direct funds to underserved regions and industries. Historically, financial institutions have tended to concentrate on urban areas or specific industries. Crowdfunding platforms enable investors to support initiatives and businesses in various regions, thus contributing to more diversified regional development.
6. Accountability and transparency
Platforms for crowdfunding frequently emphasize transparency and accountability. Entrepreneurs in search of funding must provide detailed business plans, financial projections, and progress reports. By promoting responsible business practices and reducing the risk of fraudulent schemes, this transparency benefits both investors and the economy as a whole.
7. Catalyst for Innovation
When seeking funding through crowdfunding, entrepreneurs and startups are incentivized to present innovative and compelling concepts. This contributes to a culture of innovation that fosters and encourages a competitive environment in which businesses endeavor to provide innovative solutions to real-world challenges.
Looking for a fintech crowdfunding platform to start your investment journey?
Investree Philippines is the country’s first Securities and Exchange Commission (SEC) recipient of a permanent crowdfunding license. Investree Philippines connects small and medium-sized enterprises (SMEs) with investors like you who are willing to finance up to 80 percent of the SMEs’ invoice amount and help them grow their business with additional working capital. With Investree's comprehensive risk-scoring engine and risk-based pricing for SMEs, you may diversify your portfolio in accordance with your risk tolerance.
If you are looking for SMEs to invest in through a reliable crowdfunding platform, Investree Philippines is always ready to help!
Take a look at the solutions we offer:
- Portfolio diversification. We offer an exclusive selection of investment notes that are specialized in supply chain finance, which includes invoice financing and purchase order (PO) financing. These notes strengthen your investment portfolio strategically by addressing specific financing requirements within the business ecosystem and providing both diversification and development potential. These investments positively impact businesses throughout the supply chain.
- A simplified investment journey. We are committed to providing investors with unparalleled value. Our service goes above and beyond, dealing with all the complex procedures involved in the investment of SME notes, including fundamental duties such as processing, thorough verification, and comprehensive scoring. We are dedicated to providing a seamless and worry-free investment experience, ensuring an efficient and rewarding investment journey.
- Buy only a portion of the notes. You have the option of spreading your capital across a carefully curated selection of notes, which allows you to simultaneously access multiple potential growth avenues. This strategic approach enables you to navigate market fluctuations with greater resilience, with the potential to maximize returns while minimizing risk.
- Increasing returns through careful risk-adjustment of opportunities. Our short-term investments, which offer annual interest rates of up to 48%, offer an opportunity for higher risk-adjusted returns. Our investment model balances risk and return, allowing you to fund or invest in enterprises that meet your investment goals or requirements while mitigating risk. By focusing on risk-based interest rates that are well-balanced, we enable you to make informed investment decisions that align with your financial objectives and risk tolerance.
Diversify your portfolio now and contribute to the growth of the Philippine economy by helping SMEs achieve their business goals through the valuable and trusted partnership Investree Philippines offers!
To learn more about crowdfunding investment, you may read more Investree article resources here.
