For many founders, equity crowdfunding (“ECF”) does not sit high on the list of ways to raise capital. Given the choice, most would rather secure a cheque directly from a venture capital (“VC”) or private equity (“PE”) fund than work through the comparatively laborious ECF process, with its platform onboarding, disclosure obligations and dispersed base of crowd investors. The Malaysia Co-Investment Fund (“MyCIF”) has introduced a VC/PE Profit-Sharing Incentive that, in effect, brings the two worlds together: it draws VC and PE led deals onto ECF platforms and lets crowd investors invest alongside professional fund managers. Under the incentive, MyCIF will share 50% of the exit profit with the VC/PE lead investor, subject to a 5% per annum hurdle rate.[1]
The detailed mechanics released so far are limited. But the direction is clear: ECF is being nudged from a retail-led channel for early-stage raises toward a hybrid market that can anchor larger, growth-stage rounds around professional capital. For a founder, that widens what ECF can realistically fund, and it changes the calculation of whether the process is worth the effort.
ECF was growing well before this incentive appeared. According to the Securities Commission Malaysia (“SC”) Annual Report 2025, it raised RM139.34 million across 42 campaigns in 2025, up 42.4% on the RM97.84 million raised through 35 campaigns in 2024, and the growth came from larger rounds: campaigns above RM3 million climbed to 45% of the total, from 34% a year earlier.[2] The incentive, which only arrived in March 2026, cannot take the credit for that. But the trend runs in the same direction it does, toward bigger, later-stage raises, and the appetite is plainly there: established funds such as Gobi Partners and OSK Ventures International have signalled interest in bringing growth-stage deals to ECF.[3]
A Regulated Route to Public Capital
For a founder used to viewing ECF as an awkward alternative to a direct raise, the starting point is to understand what the channel actually is and why a private company is permitted to use it at all. ECF rests on a specific statutory carve-out. Ordinarily, under Section 43(1) of the Companies Act 2016 (“CA 2016”), a private company limited by shares (a Sdn Bhd) cannot offer its shares to the public or invite the public to deposit money with it, and a breach is an offence carrying up to 5 years’ imprisonment and/or a fine of up to RM3 million.[4] Section 43(3)(c) of the CA 2016 creates the exception: an offer is permitted where it is made on a platform approved, registered or regulated by the SC under the Capital Markets and Services Act 2007 (“CMSA”).
Those platforms are recognised market operators (“RMO”), one of which are ECF operators. The SC registers them under Section 34(1) of the CMSA and regulates them through its Guidelines on Recognised Markets (“RMO Guidelines”), which treat ECF as a distinct market category.[5] Through a registered ECF operator, a company can raise public capital lawfully, without the prospectus that a public offering would normally require. There are currently 13 ECF operators in Malaysia, 11 of which take part in the MyCIF programme.[6]
Eligibility and Fundraising Limits
The RMO Guidelines fix the parameters. Only locally incorporated companies and limited liability partnerships (LLP) can be hosted as issuers; public-listed companies, their subsidiaries and companies without a clear business plan cannot.[7] An issuer also cannot run on two ECF platforms at once, or alongside a listing on Bursa Malaysia,[8] and its total fundraising across ECF is capped at RM20 million over the life of the company.[9]
Investors are capped by class. A retail investor can put in no more than RM10,000 per issuer and RM50,000 in a year; an angel investor is held to RM500,000 a year; a sophisticated investor has no ceiling.[10] Those limits are why a large round is hard to fill on retail money alone, and why the bigger raises lean on angel and sophisticated investors. A VC or PE lead is a quick way to bring large amounts of capital to the table.
How the Incentive Works
MyCIF has been part of the ECF scene since Budget 2019, putting public money in alongside private investors on eligible campaigns, with a 2026 allocation of RM50 million.[11] Historically its role has been defensive, matching private capital to help a round close. The profit-sharing incentive works the other way round: it offers the VC or PE fund that leads a deal a share of MyCIF’s exit profit, half of it, once a 5% annual hurdle is cleared. The headline terms are:[12]
- • Lead investor: an SC-registered VC/PE manager or licensed fund management company with at least two years of operations;
- • Co-investment: up to RM5 million per issuer. On its face this is a fivefold increase on the existing RM1 million ceiling, though the SC has not framed it in these terms. MyCIF invests at the matching ratio for the relevant scheme (1:4 for the General Scheme; 1:2 for the Food Security, Environmental & Social Impact and Silver Economy Schemes); and
- • Skin in the game: the lead investor must anchor at least 25% of the total deal amount with fresh capital.
Two of those conditions carry weight beyond gatekeeping. A two-year track record and a 25% anchor of fresh money leave the lead with real capital at risk, not merely its name on the campaign. The incentive is also open to mid-tier companies, not only MSMEs, which widens the field of who can use it.[13]
What VC/PE Participation Means for a Round
A VC or PE lead can pull together a bigger round than a purely retail campaign would reach, and bring more structure to it. That works for the founder in some ways and against them in others. Two effects are worth thinking through before a lead is brought on board.
The benefit: a sharper valuation
In a retail campaign the founder effectively sets the price (subject to customary due diligence by the ECF operator), and for a company that is not yet profitable that price usually rests on projections which retail investors have little means of testing. A VC or PE investor will not take the number on trust. It runs its own analysis on earnings and comparables, forms a view on the returns it needs, and bargains for protections before committing. The valuation that comes out is often lower. What it gains is staying power: a price a professional has interrogated and still backed is far easier to carry into the next round, and less likely to set up a down round later. A recognised name on the register of members earns its keep in another way too, giving retail investors, and the next institutional investor, a reason to take the company seriously.
The caveat: which deals reach ECF
The catch lies in how a deal reaches a platform in the first place. A fund would normally back its strongest ideas through its own vehicles, where it keeps all of the upside for itself. So when a deal surfaces on ECF, the natural suspicion is that the fund wants (or needs) outside money to help close it. That suspicion is not always fair, and it does not by itself make the deal a weak one. But it does mean a lead investor’s presence proves little on its own. The SC’s safeguards, especially the 25% anchor of fresh capital, stops a lead investor from lending its name for a token stake. They do not, however, change the selection at work: a fund’s best deals still tend to stay in-house. So the business has to carry the round on its own merits, not the lead investor’s name.
Closing Thoughts
For years ECF has ranked below a direct raise from a VC or PE fund, and not only on prestige; the process itself put founders off. This incentive works on that very process, drawing professional lead investors into it, so that a growth-stage company can reach a larger round on a regulated platform with retail and institutional money coming in side by side. Whether any of this turns into a good deal is something only the particular facts will decide. The lead investor sets the terms, its presence says nothing conclusive about the business, and the real test, whether these rounds produce exits, is still some way off. The fair conclusion is a modest one: a route many founders had written off is worth a second look before it is ruled out.
[1]SC, ‘MyCIF unveils new silver economy scheme and VC-led profit-sharing incentive to ease MSME funding access’ (16 March 2026); MyCIF Profit-Sharing Incentive for VC/PE Fact Sheet (2026).
[2]SC, ‘Annual Report 2025’ (2026).
[3]SC, ‘MyCIF unveils new silver economy scheme and VC-led profit-sharing incentive to ease MSME funding access’ (16 March 2026).
[4]Section 43(5) of the CA 2016.
[5]Section 7(1)(e) read with Section 34(1) of the CMSA; Section 377(1) of the CMSA; Guidelines on Recognised Markets (SC-GL/6-2015(R14-2026), revised 20 May 2026); Paragraph 1.16 of the RMO Guidelines.
[6]As of June 2026.
[7] Paragraphs 13.14 and 13.15 of the RMO Guidelines.
[8]Paragraph 13.16 of the RMO Guidelines.
[9]Paragraph 13.19 of the RMO Guidelines. This excludes the issuer’s own capital contribution or any funding obtained through a private placement exercise.
[10]Paragraph 13.31 of the RMO Guidelines. An angel investor is broadly defined as a Malaysian tax resident meeting prescribed net-asset or annual-income thresholds (Paragraph 13.01 of the RMO Guidelines).
[11]SC, ‘Welcoming Remarks at the MyCIF Engagement Day’ (16 March 2026); SC, ‘MyCIF unveils new silver economy scheme and VC-led profit-sharing incentive to ease MSME funding access’ (16 March 2026). The 2026 allocation comprises RM30 million under the Federal Budget and a further RM20 million from the Ministry of Finance.
[12]MyCIF Profit-Sharing Incentive for VC/PE Fact Sheet (2026). The RM1 million cap for the standard General MSME Scheme is stated on the MyCIF microsite at https://www.sc.com.my/mycif.
[13] MyCIF Profit-Sharing Incentive for VC/PE Fact Sheet (2026).
About the authors
Shaun Lee Zhen Wei
Principal Associate
Corporate & Investor Services
Halim Hong & Quek
shaun.lee@hhq.com.my
.
Sherzanne Lee
Senior Associate
Corporate & Investor Services
Halim Hong & Quek
sz.lee@hhq.com.my
.
Carmen Lee Kar Mun
Associate
Corporate & Investor Services
Halim Hong & Quek
carmen.lee@hhq.com.my
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