Emmanuel ChijiokeCrowdfunding in Nigeria or in general is the practice of funding a project or venture by raising money from a large number of people, usually via the Internet; It is a form of alternative finance, which is a key feature of digital economy.
Thegrandly explores and invests in technological and scalable businesses and is focused on supporting entrepreneurs. We would love to meet your company!
How Crowdfunding in Nigeria With Thegrandly Works
- Create an account with us
- create your fundraising or crowdfunding campaign
- In your account, supply and link your bank account to our payment processor
- Launch your crowdfunding in Nigeria and Start accepting donations from donors within and outside the country.
- Share it with friends and the target community using different means like social media, email, etc….
Our crowdfunding platform is available to any Nigerian who hopes to raise money for a good course project. However, we will remove crowdfunding campaigns that we found to be using offensive, objectionable contents.
Anyone can start crowdfunding on Abujasales as no technical or programming skills of any kind are required to launch a campaign. You’ll get the right tools you need to create, promote and monitor a polished and impressive fund sourcing campaign.
Types of Crowdfunding in Nigeria
There are 4 types of crowdfunding in Nigeria:
- Donation-Based Crowdfunding – raise funds without expecting to be paid back
- Reward-Based Crowdfunding – raise funds for a venture or companies and earn rewards based on the amount of money donated
- Equity Crowdfunding – source for fund to provide investors with shares in a company
- Debt-Based Crowdfunding – similar to taking out a loan.
READ ABOUT THE LEGAL FRAMEWORK FOR CROWDFUNDING IN NIGERIA
Crowdfunding in Nigeria: How we Come in
This time, you are going to allow us to talk a little about ourselves, sharing with you a relevant change in our platform.
At Abujasales we have decided that we are going to undertake business projects from our investment community … and with this post, we want to share with you why we do it, we want to convey to you the motivation and implications for this strategy.
Until recently, our operating costs as a company, that is, the costs derived from searching for investment opportunities, filtering, analyzing, selecting the best we can find and negotiating the terms and conditions of each campaign, have been obtained for the most part from the businesses that obtain financing or business plan on our platform.
It is true that with this system we have been successful to an extent, but it is no less true that many other opportunities have escaped us. We believe the following key points are directly responsible:
- The investment sector in ICT/Digital Startups is increasingly crowded , especially in the Seed and Early phases.
- Entrepreneurs are increasingly demanding with the cost of capital acquisition.
- The value proposition of the equity crowdfunding platform sector itself has not always been up to the task and the perverse narrative has been established that in crowdfunding what has not been financed before is financed.
With these market conditions, with increasingly high competition for projects, our rate system made us compete in inferior conditions with respect to other actors in the ecosystem.
How did we come to this conclusion?
Firstly, because we believe that companies that are sustainable in the long term are so because they are capable of capturing value from society.
In our case, we want to add value to the investment side, saving them a lot of time and effort, so that from the sofa of their home they can become co-owners of the best Startups we can find in Nigeria.
We confess that in recent months we have done several tests, and we have found that these rates were a problem. Since June last year, we have been proposing another rate system to entrepreneurs and we have been able to formalize campaign launch contracts that we would not otherwise have been able to achieve.
We have done this test, assuming the costs that we incur per campaign with our resources and it is time to transmit that it works and that the change we initiated is here to stay.
And why is this change positive for you as an entrepreneur?
- If you are an entrepreneur, we believe that the benefit is obvious, the cost of a campaign in Abujasales is so cheap and we cover the legal and due diligence costs that applies to the projects.
- Because we believe that from a crowdfunding platform such as Abujasales, it is possible to lead the change towards a new crowdfunding model in which quality is pursued in the projects that are exposed versus the volume of operations.
And why is this change positive for you as an investor?
- Because unlike other investment assets, in order to invest in Startups, an investor needs to have access to the best opportunities, and try not to include a negative bias in the sample of projects they finance.
- Because to whom our selection, centralization, and analysis processes really add value, so that you can invest in the most comfortable and most informed way possible, is you, our investors.
- Because the fact of maintaining our cost structure as a company should not have a negative impact on the sample of projects that we propose to you.
- Because we have equal access to the best market opportunities, and in this time of change is when we will find the best investment opportunities .
- Because from now on, we acquire a shared responsibility, we will take care of access, selection and analysis and you will have the last word on whether a project deserves the trust of your savings or not.
How does the investor subscription commission work?
From now on, we will apply a commission of up to 6% to the money invested by our investors, which will allow us to pay our operating costs (reception, filtering, and analysis of operations, as well as an electronic signature and escrow account).
This commission will only be applied to new projects and only if the project reaches 90% of the amount it needs to be fully developed.
How does this commission compare to others?
In the market there will continue to be participatory financing platforms that do not charge the investor.
Traditionally in the venture capital industry, fund managers have charged an average annual recurring management fee of 2.3% (on committed funds in the investment period and on the capital invested in the disinvestment period), this commission in periods of between 8 and 10 years, which is the life of a fund, ends up being a commission of between 16%-20%.
But wait, our new commission is not very high?
We think not, that it is a fairly competitive commission in fact our decision-making processes are more similar to a fund than to a marketplace that tries to place companies among investors.
This change will take effect for all investors from December 1, 2021.
In essence, we believe that being an equity crowdfunding platform in Nigeria that does not charge projects, that receives its income from its investors, will give us greater independence and alignment of interests with our community.
We want to be able to offer the best companies to invest in and have the peace of mind of knowing who our client really is, who we work for every day, and on whose behalf we negotiate when we sit down with entrepreneurs.
Today we begin another step towards a new stage, in which there will be a lot of very good news soon.
We wait for you.
Tags: Crowdfunding in Nigeria, Platforms for Crowdfunding in Nigeria, Legality of Crowdfunding in Nigeria,
Emmanuel Chijioke
