Crowdfunding Emerging Markets

By Tadhg Walker

Crowdfunding has moved into the developing world, helping growth and the expansion of new businesses at an ever increasing rate. Technological knowledge and awareness are on the rise, opening up the developing world to new entrepreneurial opportunities. Crowdfunding platforms are beginning to help direct funds to these entrepreneurs to help build valuable infrastructure and stimulate economic growth.

Platforms, such as Homestrings, began as a vehicle to for African diaspora investors to make a difference back home. Eric Guichard, Homestrings CEO, has found strong support for Homestrings from diaspora and non-diaspora investors alike, due to what he calls a paradigm shift.  Homestrings provides opportunities previously only available to institutional investors, offering projects, funds, bonds or public-private partnerships, for regions investors have come from, or care deeply about.

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Is equity crowdfunding preventing startups from raising more capital?

By Clive Fernandes
Originally posted on the Crowdfunding NZ website

CrowdFund Capital Advisors recently released a report which is an interesting read on deal-flow as a result of Equity Crowdfunding. What really got my attention in this report were the following stats.

Within three months of a crowdfunding campaign:

– 28 percent of the companies had closed an angel investor or venture capital round.
– An additional 43 percent were in discussions with institutional investors.

This finding refutes the assumption that Equity Crowdfunding dissuades follow up investment, which could be one of the major negative perceptions that entrepreneurs and startup companies would have had with Equity Crowdfunding. The theory is that a potential Venture Capital firm would be put off from investing in an Equity Crowdfunded startup because of the thousands of existing shareholders it already has. The CCA report has shown this to be untrue and in my opinion the reasons are as follows.

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Global body reviews “an infant industry growing fast”

By Crowdfund Vibe Staff Writers

Crowdfunding can stimulate economic recovery by channelling capital to small and medium-sized enterprises (SMEs) according to a report issued by the Research Department of the International Organization of Securities Commissions (IOSCO).Cover IOSCO report

Their report identifies benefits and risks, particularly in the area of investor protection. It advises that governments around the world will have to harmonise their regulatory approaches to an increasingly global industry. In doing that governments and regulators will need to strike a balance between encouraging crowdfunding and mitigating the risks associated with its growth.

The report reviews both peer-to-peer lending (crowd-lending) and equity crowdfunding (crowdinvesting), and provides key insights on the main implications for users.  This is the first publication of its kind that ties together a global overview of the industry together with a comprehensive profile of its regulatory landscape in 13 IOSCO member-countries. (This includes the Pacific Rim countries of Australia, Japan, New Zealand, South Korea, Ecuador, Canada & the USA.)

While crowdfunding markets are small, they are growing fast. Driven by annual growth of 90% in peer-to-peer lending, the global crowdfunding market has doubled year on year for the last five years to a estimated $6.4 billion in 2013, according to IOSCO. The worldwide equity crowdfunding market is more modest in size and has grown at a slower pace. While the current market size is too small to cause systemic risk, IOSCO consider it has the potential to grow to a sizeable market in a short period of time.

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