The Securities and Exchange Commission is still pursuing the development of the crowdfunding sector despite recent setbacks experienced by the first companies that entered the local market.

Crowdfunding is a fundraising activity typically conducted by startups and small and medium enterprises (SMEs), where the public can support or fund a business idea through an online platform.

In an interview, SEC Chairman Emilio B. Aquino said “We’re sorting it out. But that does not mean that we are closing the door as far as the use of digital platforms is concerned.”

The SEC said earlier that it was conducting a special audit on crowdfunding firm Seedin Technology Inc. (Seedin) following a possible fraud committed by its former president Edison Tsai.

On the other hand, Investree Philippines Inc., the country’s first crowdfunding intermediary and funding platform, announced that it is winding down its operations and will close shop by next year.

Investree is a joint venture between Gotianun-led Filinvest Development Corporation (FDC) said its subsidiary f(dev) Digital Innovations and Ventures Inc. with Investree Singapore Pte. Ltd.

However, Aquino said new firms have filed applications with the SEC to enter the local crowdfunding business.

He said they are looking at these new applicants since the SEC wants SMEs to be able to tap these digital platforms “because the whole idea is to allow our SMEs a source of capital raising opportunities.”

In the meantime, Aquino said that, while they are conducting their investigation on Seedin, “we learn from the reports, the audits that we conduct, to plug those possible loopholes.”

In the case of Investree, he noted that this is a different issue as it seems that the foreign partner they were expecting had backed out.

Last year, the SEC launched Call-a-Friend and Engage with SEC (CAFE SEC), which serves as a channel to connect with crowdfunding intermediaries and the Philippine Stock Exchange for inquiries pertaining to their financing needs and additional information on capital market-based products and services.

“In our continuous bid for financial inclusion, we recognize that there really is a need to broaden the financing instruments available for MSMEs,” SEC Commissioner Karlo S. Bello said.

The Commission pitched crowdfunding, among others, as an accessible and viable capital-raising option for MSMES and startups for their business expansion.