The Latest Crowdfunding News – 20/7/16
The Latest Crowdfunding News
Hi guys and welcome to another crowdfunding news edition, as usual, we will be giving you a snap shot of the latest news from the crowdfunding world, this week we predominately stay in the UK, however we end our round-up in Africa and look at the latest crowdfunding start-ups to keep an eye on.
Why Fintechs Are Turning To Equity Crowdfunding For Investment
Firstly, using equity crowdfunding is great for brand awareness and customer acquisition, UK fintechs have attracted significant attention in the media and as a result have raised awareness of their innovative ideas and products. From raising awareness, a majority of fintechs have gained potential investors to sign up for their products.
Moreover, due to the fact that scene continues to produce more and more start-ups by the day, it’s become increasingly hard to stand out. Therefore, offering customers the chance to become shareholders, (like Mondo and Tandem did), companies can drive customer engagement and loyalty.
Start-ups also use equity crowdfunding because it gives them control. This is because they can gain a higher valuation compared with traditional methods. According to research by Beauhurst, direct investors seem willing to accept lower equity stakes for the same investment than VCs or Angels. (Business Insider, July, 2016)
They beauty of using this approach is the diversity of investment sources. Crowdfunding offers an alternative to traditional sources of funding, which could be very beneficial if economic turbulence negatively affects VCs’ willingness to invest. Because of the Brexit, we might see more fintech start-ups turn to crowdfunding.
Crowdfunding : A New Era on The Cards?
Two months ago, new rules* came into play which allow average people to invest in start-ups through crowdfunding sites that reward investors with equity. The new rules usher in a new era of crowdfunding that is accessible to individuals of all economic backgrounds, as mentioned by Crowdfund Insider’s Christian Catalini.
As part of the federal JOBS Act, Title III rules allows the average investor the opportunity to share in the returns of the “next big idea” as Catalini mentions in his recent article.
President Obama has said he sees it as a game-changer, these set of regulations will help all investors—regardless of income or net worth—will be able to invest in high-potential startup companies.
Title III will therefore help funding for small businesses, an essential vehicle for marketing and branding as well as a tool for building a committed user base for new ventures.
*Rules in the USA.
London-Based Crowdfunding Platform Goes Dutch
London-based crowdfunding company Seedrs has expanded its international presence with a new office in Amsterdam. (City A.M., July 2016)
Seedrs, which does already has links elsewhere on the continent, a software development office in Portugal, and back in October it announced a new partnership with Benelux-based bank ING.
Chief executive and co-founder of Seedrs told City A.M. : “We have always had a pan-European vision for Seedrs, and the launch of our Amsterdam office brings that vision one step closer to reality.”
Khan Backs Twenty Crowdfunded Projects Across London
The London mayor is helping to crowdfund 20 ‘citizen-led’ projects aimed at improving local communities across the capital.
The crowdfunding projects include: ‘Kitchenette Karts’ in Tower Hamlets, a healthy, sustainable fish and chip truck, ‘Old Kent Road Studios’ in Southwark, a project which aims at transforming 60 vacant garages into workshops and studios, and ‘Pengelicious’ in Bromley, a food festival. (KCW Today, July 2016).
Sadiq Khan recently mentioned that: “Our crowdfunding initiative is a chance for all Londoners to take part in the regeneration of their neighbourhoods from the grassroots up. Today I’m pledging support to an extraordinary range of local groups, for projects that will help strengthen their local communities and make London an even greater city.”
5 African Crowdfunding Start-ups To Keep An Eye On
Africa has seen a plethora of start-ups from all over the continent and crowdfunding has bags of potential to solve the continent’s lack of access to finance challenges.
Here (in no particular order) are five of the most innovative African crowdfunding startups to keep an eye out for.
Usizo – Bitcoin startup Bankymoon from South Africa has announced it will launch a crowdfunding platform, Usizo, that allows public schools in the continent to use blockchain technology to crowdsource utility credits.
This revolutionary concept means that anybody from around the world can make a payment directly from using their preferred crypto-currency, and help fund the energy or water needs of the school.
Realty Africa – Is the first crowdfunding platform that’s dedicated to property investments in Sub-Saharan Africa. The company was launched last year, in a nutshell, allows investors from all over the world to invest in the growth and development of the region.
Realty Africa provides investors with access to markets that have been historically out of reach, allowing them to invest amounts from US$1,000 upwards. Moreover, the platform allows communities and project developers to raise capital, without high-interest payments or collateral requirements.
ABREC.FinanceUtile – Originally developed by the African Biofuel and Renewable Energy Company (ABREC) and in partnership with French crowdfunding platform FinanceUtile, is a dedicated crowdfunding platform for SMEs operating in the Sub-Saharan African renewable energy sector.
ABREC.FinanceUtile supports entrepreneurs in the renewable energy space by facilitating the transfer of know-how and technology, while also boosting access to reliable electricity generation in sub-Saharan Africa.
Lelapa Fund – Is a niche crowd investment platform dedicated to African companies (as described on their website). Investors can buy shares online in pre-vetted start-ups and small businesses whose products and services are sold on high growth consumer markets across the continent.
Thundafund – The South African start-up is one of the crowdfunding veterans on the continent, launched back in 2013, Thundafund has raised over ZAR5.7 million (US$396,000) from various crowdfunded projects.
They have recently put together work shops to educate fellow South Africans about how the crowdfunding process works.
What Are Your Thoughts?
Which of our chosen crowdfunding stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.
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