JA Malta CEO: Equity crowdfunding could be Malta’s next big economic driver

Malta’s entrepreneurial ecosystem is bustling with activity. From the launch of DiHubMT to events like the StartinMalta Startup Festival and the EU-Startups Summit, the island is showing strong signs of innovation.

Yet, many grassroots ideas “struggle to make the leap from concept to reality,” said Matthew Caruana, CEO of JA Malta Foundation.

He believes the solution lies in equity crowdfunding. “Equity crowdfunding holds the key to transforming the way Maltese investors and entrepreneurs connect,” he stated in a recent LinkedIn article.

This method allows the public to invest in startups, offering them a “genuine stake in a company’s future,” while enabling entrepreneurs to secure much-needed funds.

Democratising investments for growth

Mr Caruana highlighted that Malta is a nation of savers, referencing Central Bank of Malta data to point out that these savings often remain in bank accounts, earning only modest returns. He suggested equity crowdfunding as an alternative, enabling investors to support startups while potentially reaping higher returns. “Instead of letting your money sit quietly in the bank, you can invest in ambitious Maltese startups,” he said.

By diversifying investments across different ventures, individuals can manage risk while actively contributing to the local economy, he adds.

Mr Caruana argues that Malta’s close-knit community makes it a natural fit for equity crowdfunding. He pointed out, “it makes sense to connect entrepreneurs directly with people who care about supporting local talent.”

Navigating the regulatory landscape

A robust regulatory framework underpins the concept of equity crowdfunding. The European Crowdfunding Service Provider (ECSP) Regulation provides standardised rules across the EU, offering Maltese startups access to local and international investors, he noted.

“These regulations maintain trust and confidence in the crowdfunding world,” Mr Caruana highlighted, which he sees as crucial for encouraging broader participation.

However, challenges remain. Education and financial literacy are essential to ensure potential investors understand the risks and rewards. Mr Caruana stressed, “the more we talk about what equity crowdfunding is – and what it is not – the better equipped potential investors will be to make informed choices.”

Addressing barriers to adoption

Paul Grech, Head of Investments at GO Ventures and a startups mentor, shared his thoughts in the comments section of Mr Caruana’s post.

“Not sure that the Maltese market is ready for this,” he said, pointing to a need for education and better incentives, such as those provided by the UK’s EIS and SEIS schemes (Government initiatives that encourage private investors to invest in fledgling UK businesses). Mr Grech also noted that Malta’s current schemes often feel overly bureaucratic.

Mr Caruana responded with openness to collaboration, stating, “I suggested that campaigns are pre-approved and they would be able to show a tag that says so. This will encourage investors to fund these campaigns.” He further emphasised that awareness is key to overcoming these barriers.

Building a community for success

Equity crowdfunding is about more than just raising capital. It is about creating a community that rallies around innovative ideas. Mr Caruana urged, “we need a community willing to share knowledge, insights, and encouragement.”

In his concluding remarks, Mr Caruana expressed optimism about the future: “By directing our savings towards startups with promise and heart, we can help shape a future where Malta’s brightest concepts have the resources and the support they need to shine.”