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8 ways to finance your eCommerce business in Malaysia

As an eCommerce startup or business, how many funding options do you actually have? Here we compile 8 ways to finance your eCommerce business, especially in Malaysia.

Every business need capital, eCommerce merchants are no exception. Even the best-run businesses will need extra capitals to fuel the expansion.

8 ways to finance your eCommerce business in Malaysia

So as an eCommerce startup or business, how many funding options do you actually have? Here we compile 8 ways to fund your eCommerce business, especially in Malaysia.

#1. Your personal savings


If you have any savings, that's good news! Nothing comes easier than Your Own Money (YOM). You don't have to seek any approval to spend or invest your own money. This is just a matter of how much you have and whether it is sufficient for you to kickstart your business.

I have a friend who started his trading business with just RM3,000 and he grew it into a Million ringgit within just 18 months! If you don't have sufficient savings, then you have to start thinking about Other's People Money (OPM).

#2. Your friends and family 


Friends and family, they are your very closed circles, your loved ones, the people who are trusting you unconditionally. Most of the time, they will lend you money just to show their support, even if they don't really buy into your business idea.

Do you know that Mr Terry Gou of Foxconn (the largest contract manufacturer in the world), started his business by borrowing $7,500 from his mother? However, be warned, friends and family money come at a personal cost, don't screw it up as this will cost you the relationship itself!

#3. Angel investors 


Angel investors are some high net worth, well-networked individuals. They also possess a risk appetite and long-term interest in seeing your business grow into success.

They can also become your mentor, someone you admire who trusted you enough to put in some small initial capital in your company and asking for a small stake in return. Don't know any "angels" in your network? Then Malaysia Business Angel Network is a good place for you to start looking.

#4. Crowdfunding


Imagine if you have only a new product idea, but not yet a real, ready-to-market product. Bingo! There are crowdfunding platforms like Kickstarter which allows you to pitch your product idea. Of course, you need to showcase a product prototype plus committed deliverables if you manage to raise the minimum amounts to turn your idea into a REAL product.

Look at this super cool example of a travel jacket which gets funded for a whopping USD $9 Million dollars! That's 9 million worth of trust in just your product idea, giving you the seed money to turn your idea into a real product and probably your first pot of gold!

Cool travel jacket at Kickstarter

Apart from Kickstarter, there are also different kind of crowdfunding platforms. Instead of letting the crowd (public) fund your products, the platform allows the public to directly buy and own a share in your company.

A good example in Malaysia would be pitchIN, a security-commissioned licensed, locally started equity crowdfunding platform that has successfully helped eCommerce merchants like Babydash raising over RM1.57 million.

#5. Venture Capital (VC) fund 


VC fund, in short, is equity financing. They invest in your company and in return, they own a chunk of your company. Normally, VC fund is raised and setup with the goal of investing in high risk, high return businesses. Some VCs will invest in very early stages (Seed and Series A) of a company, some prefer to invest in later stages (Series B, C, D onwards) of a company.

If compared to the angel investor, VCs will normally invest a larger sum of capital. Of course, in return, you are giving out more shares too. VC's money is anything BUT free money, a fund which requires a lot of time and effort to secure. Want to raise money from VCs? Here's a good place to learn about the basics of VC fund.

#6. Bootstrap 


Self-funded is always a viable (but slower) option! How does this work? A very pragmatic way is by selling whatever products or services you possess to bring in the interim or extra cash for your business. For example, in the early days before Lelong became profitable, they built websites for clients to bring in the cash needed to run the business.

The beauty of bootstrapping? You don't have to lose control of your business and being able to run it the way you seem fit! This is a question for you to ponder, is there any services you can do now to bring in extra cash for your business?

#7. Your suppliers 


For most eCommerce merchants, your suppliers are one of your most important partners and also your financing sources. As an eCommerce merchant, you are basically getting the products upfront "for free" if you have already secured payment terms with your suppliers. Upon receiving of goods, you will have an extra 30, 60 or 90 days to make the sales, collect the money, then only pay back your suppliers.

If you are a good paymaster, some suppliers can even offer payment incentives for prompt payment and they might extend your company a better credit amount and terms. Of course, negotiation and trust are both essential in this aspect otherwise why would your suppliers want to give you fast-selling products? 

#8. Loans


Loans (also known as debt financing) are very common for traditional SMEs. However, there aren't many online merchants taking advantages of it yet, as the application process is cumbersome, tedious, and usually require physical assets like machines, factory or houses as collateral.

It is fair to say that conventional loan products by banks are not designed for the online business. However, we have discovered 2 local loan products which are mainly catered for online merchants.

Online Business Financing Program (OBF) by SME Bank


Online Business Financing (OBF) by SME Bank

This loan is specially designed for online entrepreneurs to build up your online presence, lending out from RM20,000 to RM500,000 at a 7% annual interest rate. Interestingly, SME Bank segments loan applicant profiles into 4 major categories, and only those who aspire to build own brands are allowed a maximum amount of loan.

Learn more about SME Bank OBF.

CIMB Lazada Clean Loan


CIMB Lazada Clean Loan

The product shares similar features with CIMB's Customized Enterprise Clean Loan (non-collateral financing, means no hard assets are required). It currently offers Lazada merchants a financing of up to RM300,000 per company with loan tenures of up to five years. Upon full document submission, it will only take 48 hours for approval with loan disbursement within 24 hours.

Learn more about CIMB Lazada Clean Loan

Last but not least, not forgetting loan products like personal loans or your credit cards are also viable financing sources for your eCommerce business. You can go for one, or multiple financing options as long as it fits your business!

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ecInsider: 8 ways to finance your eCommerce business in Malaysia
8 ways to finance your eCommerce business in Malaysia
As an eCommerce startup or business, how many funding options do you actually have? Here we compile 8 ways to finance your eCommerce business, especially in Malaysia.
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