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Crowd Capital
Bridging the gap
www.crowdcapitalng.com
Investor
SOLUTION
Benefits of crowdfunding
Start building your
portfolio today with
as little as NGN
10,000 and help
our local businesses
grow.
Introduction
Crowd Capital is a
Our GOals
We look forward to helping you
business investment plat-
- Provide start ups and sme’s
get ahead.
form that supports the funding
Freedom
Access
Allows investors to investigate numerous potential
investments online and determine quickly whether
the company fits their portfolio strategy and risk appetite.
Democratise and expand access to capital by enabling the community and it’s people to decide which
entrepreneurs and small business entrepreneurs
obtain funds for growth.
Opportunity
Support network
Create an opportunity in the diaspora to contribute
to local businesses and remit money back to their
country of origin.
Give start ups and sme’s a support network through
highly motivated crowd, many of whom may have
skills from which entrepreneurs can benefit and may
even help the business form valuable connections to
Enabling mechanism
Expantion
Serve as an enabling mechanism for new venture formations, job creation and inclusive economic growth.
Provide a new source of early stage venture.
Expand geographic range of angel investors.
with access to capital.
of start ups and SME expansion
through crowd funding for equity
- Cultivate high growth entrepre-
or debt instruments(convertible
neurs in developing communi-
notes), giving entrepreneurs a
ties.
platform to connect with people
and raise venture capital.
- Create a support system and
network for start ups and sme’s
People with an interest in invest-
that improves their chances of
ing in start ups and SMEs now
success.
have an easy way to invest in
people and companies that they
- Catalyzing flows of capital with
want to support as well as follow
and between communities ir-
a company’s progress and be part
respective of distance.
of their success.
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Investment models
Equity Funding
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Businesses sell financial instruments(shares)
in order to raise capital and in the process
Debt Funding(convertible notes)
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Raising debt capital in the form of loans that
could be converted into equity shares.
creating a potential for investors to share in the profitability of the venture.
How equity funding works
2
Companies offering equity based crowd
funding projects post offerings on a
How debt funding works
2
Businesses offer a debt instrument that pays
a fixed rate of interest determined by the
campaign page. They can use social media to invite
investors themselves. The entrepreneur agrees a fixed
potential investors to review the offerings along with
schedule for the return of the principal investment.
our database of local investors.
When that schedule is reached, investors can decide
to cash their money out of the business or convert
that debt notes into shares based on a pre arranged
value of shares. *only sme’s with a track record and
cash flow can issue debt instruments.
Required information from
entrepreneurs issuing equity
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Information about the business and the
owners i.e business plan, and intended use
of funds.
Type of equity security being offered e.g A shares or
B shares.
Percentage of the company being offered and target
amount.
Length of time of offer.
Required information for sme’s
issuing debt instrument
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Information about the business and the
owners and intended use of funds.
Type of debt security being offered e.g loans, bonds
etc.
Life span of loan and target interest rates along with
terms of the instrument.
Assurance and documentation that debt holders will
be senior to equity holders in the case of bankruptcy
Pre requisites for
equity offerings
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Business must be registered with corporate
affairs commission.
Pre requisites for
debt offerings
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Business must be registered with corporate
affairs commission.
Provide certificates of incorporation and all relevant
share holding documentation.
Provide certificates of incorporation and all relevant
share holding documentation.
Owners must supply background and personal
information, and relevant experience in their area of
business will be advantageous.
Owners/directors must supply background and
personal information, and relevant experience in the
business.
Indepth and detailed business plan including how
intended capital will be deployed and company valuation.
Indepth and detailed plan on how intended loan will
be deployed.
Financial model/forecast for the next 3 years.
Financial statements for the last 3 years, and cash
flow statement.
Clear exit strategies for investors i.e IPO, Company
sale, buy back options etc.
Clear terms on loan, principal return schedule and
how and when interests will be payed to investors.
If all these requirements are satisfied, your application will be accepted and the next stage is
the pitch.
The pitch is what will appear on the entrepreneurs campaign page along with the business plan. The pitch is the
compelling reason why investors should invest and other relevant details and information about the business
etc.
The pitch will be accompanied with a video that serves as an elevator pitch. A chance to establish a connection
with the investors and speak to them.
Successful crowd funding campaign
Once crowd funding target is met , there will be a 14days cooling off period for investors to finalize all due diligence and for all paper work to be signed before funds can be transferred.
Progress made towards funding target if any.
Terms and conditions of accepting funds
All business ideas will be carefully vetted by an expert team before it is listed on the platform. This will
Entrepreneurs must have an open dialogue and communication with investors through our Customised investor
relations portal.
help weed out unrealistic proposals and reduce wastage of time and resources.
We will enter into a strategic partnership with a business consultancy and adopt their baest practices as a
standard template. Applicants will be encouraged to seek assistance from our partner consultants to improve
their chances of approval i.e if your application is vetted and approved by the consultancy, you will be auto-
Quarterly business and progress reports on how finances are being used. (Financial statements and cash flow
that will be audited by the crowdcap team).
Full cooperation with investors upon request of any information that is deemed reasonable.
matically accepted onto the platform.
Applications can still be approved by crowdcap without input of our partners provided all pre requisites are
Entrepreneurs must engage with our chosen legal partners to adopt our articles of association and all terms and
conditions that encourage best practices and encourage swift transfer of shares.
fulfilled.
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CrowdCapital fees
Special investments
Once crowd funding target is reached, there is a 10% success fee of total funds raised paid to crowdcap.
Special investments are investments that contribute to either infrastructural developments or the agricultural
sector. With these types of investments, we aim to partner with the bank of industry, world bank and state/
federal,governments to guarantee 50% of the target funds. i.e once a campaign has been 50% funded by the
crowd, one of our partners will join the campaign by investing the remaining 50%.
There is a 120,000 Naira legal and administration fee relating to drafting of all paper work and allotment of new
shares to investors once. This fee is payable upon successful campaign.
E.g Taiwo and sons require 5million Naira to establish a commercial rice farm. Once the crowd have invested
upto 2.5million Naira, bank of industry will partner with the crowd by investing the remaining 2.5million Naira.
Membership for entrepreneurs is free. Campaign page and pitch listing is free.
There is no charge for investors to register.
Investors who accumulate over a 1million Naira of investments in a year are liable to pay 1 percent management fee of overall investments.
*year is calculated from the date of your first investment.
Framework protecting investors
You can only invest a maximum of 10% of your annual income per deal.
Investors money to be held in an escrow or third party account independent of crowdcap and will only be released to entrepreneurs once funding target is reached and all paperwork are completed.
Potential creation of a secondary market
Selling of private company shares between investors.
There is a potential to create a secondary market for investors who no longer wish to hold on to their equity
shares or debt instruments to sell to other investors within our platform.
This will help increase flow of cash and increase liquidity within our platform and offering our investors an extra
level of security by offering them another exit strategy.
* owners of securities are free to set their asking price with the final agreement given by a third party broker. .
* there will be a regulatory team keeping an eye on the market to avoid money laundering and financial abuse.
Funds can only be transferred through wire transfer and card payment for security reasons.
How we are involving private sector and
creating strategic partnership
Mentorship programs. Our aim is to
partner with top tier companies in Nigeria
who are willing to allow one of their C level
executives or senior management to mentor one or
some of our start up entrepreneurs. They can use their
skills and expertise to help nurture the next generation of budding entrepreneurs.
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Co working spaces. We aim to create
a co working space in our offices where entrepreneurs can come and share ideas and
work on their businesses. We would provide internet
access, laptops, printers, scanners etc as well as accountants, lawyers and other professionals who can
help them with the day to day running of their business. We would also like to create a system were our
entrepreneurs can visit established business’s offices
to experience how their operations are run which will
serve as a source of inspiration and motivation for
them.
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Peer learning opportunities. We
aim to partner with professionals and academics who can host seminars and lectures on business
practices and several other topics centered around
business and ethics. All of these is to serve as a support
system and network for our members and entrepreneurs.
We will also host similar lectures for our investors to
help improve their knowledge on investing, building a
portfolio, and spreading their risk.
We will foster partnerships with INFODEV to help
facilitate skills training for entrepreneurs which overviews main tenants on crowd funding , pitch training to
improve their chances of success.
Co investing strategies through partnerships
The aim of the co investing strategy is to partner with the bank of industry, state/federal government to co
invest in stand out ideas that require bigger capital. This is a chance for the organizations to further boost their
outreach programs to sme’s and start ups whilst kick starting businesses that will contribute to the economy
through taxes and job creation.
We would also look at investment companies, banks and other seasoned investors to act as anchor investors.
Anchor investors are investors that will kick start a campaign by investing at least 30% of the target funds.
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Crowdfunding risks, fraud,
failure and fulfillments.
Funds transfer
in crowd funding; Crowd funding investors
must deposit investment funds
directly through an electronic
automated clearing house which
will then be transferred to an
escrow agent on behalf of crowdcap. The use of this and registered banks would help provide a
robust framework for compliance
and auditing.
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Lack of investor
sophistication;
crowd funding investment is primarily targeted at
non accredited investors & non
professional investors who may
be less qualified to make informal decisions about investments.
Our platform will communicate
clearly that investments are not
guaranteed.
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Business failure
risk; investing in
early stage companies carries
a significant amount of risk because of lack of revenue history,
mature management team and
adequate structure. Potential
investors need disclosure document to help them understand
the risks, lack of guarantees,
liquidity limitations and other
potential pitfalls. There is a need
to partner with third parties to
produce a robust, easily understood investor educational tools.
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Money laundering; There are international anti money laundering
laws which crowd funding investors must comply so therefore
the risk is not any greater in
comparison to traditional investments. The mechanism used by
electronic payment processors
and clearing houses also contain protection against money
laundering.
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Fraud; so far, there hasn’t been successful fraud registered
on crowd funding platforms in the developed world. Fraud in
crowd funding investments would have to occur on a many to
many basis . A potential fraudster would have to stand up to the wisdom,
queries and insights of the entire crowd. For this reasons, the most likely
scenario for successful fraud involves criminals creating a fake crowd
funding platforms and fake companies to attract investors money.
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CrowdCapital Protective mechanism against potential fraud
fraud - mitigating tactics
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Background checks for issuers of equity and
debt instruments.
fraud - mitigating tactics
No guarantee on return ; educating inves-
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tors about portfolio diversification as a
means to prevent total loss of investments.
Mandatory auditing, financial disclosures and business review.
Requiring all or nothing financing prevents fraudsters
running when difficult questions are being asked.
Restricting or monitoring social media communication
about offerings.
Providing investor education to learn how fraud has
been perpetrated in the past so that investors can
identify in future.
Mandatory holding period to prevent pump and
dump.
Sector risk - mitigating tactics
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Anti money laundering mitigating tactics.
Placing caps on amount that may be in-
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vested within specific time periods.
and funds transfer to allow for further diligence by
investors.
Subsequent funding failure mitigating tactics
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Bringing on crowd fund investors creates a
more complicated investor table that may
deter subsequent investors. This can be mitigated by ;
Raise small amounts of capital to show market interest and customer validation.
The use of special purpose vehicles to group all crowd
fund investors into one voting group to ease commu-
Consider leveraging the crowd for only a small part of
nication and voice.
the overall capital raised to identify interest and de
risk the bigger investment.
Offer to buyout crowd fund investors at subsequent
rounds of financing at an agreed price.
(Investor) Investor liquidity &
losses - Mitigating tactics
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Crowd funded stocks are not liquid, businesses do fail and investors can loose their
investments. This can be mitigated by;
please note, crowdcap offers NO GUARANTEES on performance of companies
or their ability to
repay investments
or loans.
A cooling off period between reaching funding target
(Entrepreneur) Lack of issuer experience - Mitigating tactics
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Entrepreneurs do not always have all the
Regulatory and compliance risk
- Mitigating tactics.
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Regulatory bodies may resist or reject the
argument that crowd funding is an appro-
priate and effective method of financing early stage
companies. This can be mitigated by;
Working with local governments prior to offering
crowd fund investing.
Engage with local regulatory and policy constituents
to build crowd founding framework.
(Industry) Market rejection Mitigating tactics
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Investor community might not have an
appetite for this new emerging asset class.
Thus can be mitigated by;
Leveraging the media to share success stories of businesses that have been successful with crowd funding
investing and jobs that has been created.
Share early financial engagement stories of investors
who have backed crowd funded companies and why.
experience needed to build, run and raise
capital for a business. This can be mitigated by;
Offer crowd fund investments in tandem with more
traditional investments to act as an honest broker.
Investment limits for non accredited investors.
Allowing for crowd vetting and crowd diligence to
discuss the merits/risks of the offering in a public
manner.
Promote the creation of secondary markets after a 12
months holding period where shares maybe traded
based on supply and demand.
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Create education programs about how to build a business.
Create education programs about how to raise money
from crowd and follow through with a plan once
funded.
Requiring the participation of either a securities broker/dealer, an attorney or accountant.
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So why
crowd fund with us?
Management team with experience in raising capital for businesses, cross border investment management and client relationship management.
Working partnerships with the private sector and reputable organizations.
Innovator in the crowd funding space in Nigeria.
Opportunity to participate in the growth of businesses in Nigeria and subsequently in the growth of the Nigerian economy.
Opportunities to make healthy returns on start up investments and build/diversify your investment portfolio.
Offer expertise as an angel investor to budding entrepreneurs in your area of interest and experience.
Start building your portfolio today with as little as
NGN 10,000 and help our local businesses grow.
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Get in touch
Crowd Captal.
Phone
+234 809 082 1348
E-mailrgbadamosi@crowdcapitalng.com
www.crowdcapitalng.com
Crowd Capital