PHILLIMON MHLANGA
The Reserve Bank of Zimbabwe (RBZ) has issued crowdfunding licences to several local firms, which will help businesses raise funding, Business Times can report.
Crowd funding is a viable alternative financial platform to raise capital for businesses and can make a big difference to struggling companies.
As its name indicates, crowd funding, which has gained substantial popularity across the world where it’s now a vibrant industry and developing faster than expected with global firms embracing the alternative financing model to generated value by embedding the platform capabilities into their business models, can take the form of equity-based crowdfunding or peer to peer lending.
Generally, crowd funding entails the obtaining of funds from the public or institutions via the internet platform, usually constituted by contributions of small amounts from large numbers of people.
But, the concept had not captured the hearts and wallets of Zimbabwe companies that remained skeptical about crowd funding which is sometimes called crowd investing or crowdfunding or crowd financing.
The RBZ governor, John Mangudya, told Business Times that the central bank has started issuing licences to local companies for crowdfunding, meaning Zimbabwe companies can now start enjoying huge benefits that come with the new model of investing called crowd funding.
Mangudya, however, did not reveal the identities of the several local companies that were granted the licences.
But, Business Times can report that one such company that recently received a crowd funding licence from the RBZ is Lloyd Crowdfunding .
“We have started licencing those with such (crowd funding) initiative under Fintech Regulatory Sandbox,” Mangudya told this publication.
The online method of fundraising allows companies to put their business ideas or pitches onto a digital platform.
These pitches are then available for people worldwide to see and decide whether or not they would like to support the businesses.
One critical issue is that with crowdfunding, there is no pressure of repayments.
But, this has not been the case with local companies with small to medium enterprises in Zimbabwe facing severe financing constraints that has been limiting their growth and development.
The challenge has been that they face strict eligibility requirements and they are starved for capital because the most common sources of financial resources such as bank loans, private equity and public offerings of securities are beyond the reach of these companies.
Consequently, many innovative ideas that could result in booming business for the national economy and for the creation of jobs are not developed.
Across the globe, crowd funding is popular.
Closer home in South Africa, crowdfunding has become a growing force with Thundafund, the brainchild of entrepreneur Patrick Schofield who founded the platform in 2014, at the forefront.
Some of the best platforms include Jumpstart, Angel Investment Network, Uprise Africa and the People’s Fund. South Africa is the second largest economy in Africa.
It has also sparked a wave of imitations with Kenya, Nigeria and South Africa leading the way.
In the developed economies, there is a crowd funding hub in the Netherlands, where there are thousands of successful crowdfunding platforms.
These include Spotcap, Lendico, VooDeKunst, GeldVoorElkaar and Oneplanetcrowd, among many.
In Europe’s largest economy, Germany, there is Betterplace.org, Auxmoney.de, Seedmatch.de, Startnext.com,Wemakeit, Indiegogo and Kickstarter, among others.
In the United Kingdom, crowdfunding platforms include Crowdfunder.com, Fundingcirle.com, Zopa.com, Crowdcube.com and Seedrs.com. Kickstarter and IndieGoGo.
In Belgium, there is Look&Fin, Ulule, Angel.meCrowFun.be, MyMajorcompany, Mymicroinvest.com and Bolerocrowdfunding,among many. Indiegogo and Kickstarter have a relatively large presence as well in Belgium.
France was among the first countries to embrace crowdfunding with the first platforms launched soon after the 2008 financial crisis. France now has more than 200 crowdfunding platforms including volumes doubling each year. The platforms include LendingClub, Indiegogo, Kickstarter,KissKissBankBank &Ulule, Anaxago, Weseed, Lendix,Unilend, and Lendopolis,among many.
Modern day crowdfunding emerged after the financial crisis in 2008 as businesses were finding it difficult to raise funds because banks were less willing to lend entrepreneurs.
And in the past decade, crowd funding spread across the developed world and it’s now into the developing world as well.
Technology will make it possible for businesses in Zimbabwe able to engage investors anywhere in the world.
