Will Equity Crowdfunding have the power to revolutionise the way in which entrepreneurs seek finance in the future?

February 25, 2014 rachel_eaton

In a poll, 88% of those who attended MJ Hudson’s Future of Crowdfunding panel event believe that this is the case and the numbers speak for themselves.

Equity Crowdfunding is witnessing increasing levels of interest, especially from SMEs, with 5000 in the UK seeking funding through alternative finance. Over a 3 year period, crowdfunding has increased by 371% (Karma Sandup, Partner at MJ Hudson). This rapid growth of interest in alternative finance has attracted the attention of regulators, resulting in the recent publication of the FCA’s consultation paper.

In light of potential regulation, on February 19th 2014, MJ Hudson, the Alternative Assets Law Firm hosted a panel event around the issues arising from the FCA’s consultation paper for the future of crowdfunding. The event brought together senior management from across a range of predominant crowdfunding platforms such as, CrowdCube, Seedrs, SyndicateRoom and InvestingZone and centred around two main points of interest;

How will regulation affect crowdfunding?
Will crowdfunding survive?

Although some view future regulation of innovative finance as potentially damaging, members of the panel were united in stating that they did not see the FCA’s consultation paper as a threat to the future of crowdfunding. If anything, panel members supported regulation, as a way to brand crowdfunding as a credible financial option. Legal & Financial Director of Seedrs’, Karen Kerrigan highlighted that crowdfunding platforms are not cowboy companies and already adhere to regulation and stated that, “official regulation is a sensible move by the FCA”.

Commenting on the future of crowdfunding, Tom Britton, CTO of SyndicateRoom informed the audience, primarily made up of entrepreneurs and investors that, “the industry will survive, banks don’t want to touch this space, even venture capitalists aren’t keen, unless the prospects are very big”. To support this statement, during the panel event, the audience voted on a live poll. When asked, “Will Equity Crowdfunding have the power to revolutionise the way in which entrepreneurs seek finance in the future?” 88% of people said yes, whereas only 12% said no.

Insight

Africa Trivial pursuit: What sector is the second largest employer in Nigeria?

February 19, 2014 rachel_eaton

Isabelle Alenus-Crosby

Believe it or not, it is culture, with agriculture claiming the top spot. Nigeria produces almost as many films as Bollywood, at more than 50 per week, with each film employing more than a hundred people. It is not surprising therefore that the Nigerian film industry (Nollywood) is worth almost US$ 4 billion.

Africa is rich in talent and creativity, but we don’t get to see much of it (yet). The pool of talent cannot be commercialised due to the lack of crucial infrastructure. Africa’s world of Music, Art, Fashion, Literature, Design isn’t managing to go global, yet it could be a vast contributor to the continent’s economy.

The African Arts Institute, the European Union and UNESCO’s National Commission (among others) have found that culture “contributes substantially to development at national level, fostering economic growth”. A 5-year study, concluded in 2013, found that culture could be as important as a source of income as tourism. And so, as of this year, and thanks to UNESCO’s findings, governments in Africa can now be “officially” persuaded to start giving priority to the type of infrastructure that will facilitate artists to bring their work to the masses.

I expect that Africa’s big transformation in the upcoming years will therefore not just be economic but also cultural. And I for one can’t wait to see what’s going to hit the world when it does.

Insight

Rising Inequality – Impact on Africa?

February 10, 2014 rachel_eaton

Isabelle Alenus-Crosby

“Average wages have barely budged. Inequality has deepened; upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by — let alone get ahead. And too many still aren’t working at all.” – Obama’s State of the Union address on January 28^th, 2014.

A lot of the gains of the global economic recovery that we’ve seen have gone to the people at the very top, particularly the top 1 %. – The Economist, one day later.

In the past week, economic inequality has been all over the news. As always, I read everything with interest whilst wearing my Africa hat.

Economic growth in Sub-Saharan Africa remains strong with almost a third of countries in the region growing at more than 6% according to the World Bank’s new Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects. However, as Africa’s growth rates continue to surge, Africa’s Pulse notes that poverty and inequality remain “unacceptably high and the pace of reduction unacceptably slow.”

So, what is being done?

Africa’s pulse states that following the global financial crisis, “a growing number of African countries are setting up social safety nets to protect the health and livelihoods of poor and vulnerable people during periods of adversity”. In addition, “the steady growth of the Middle class is also translating growth into much less inequality”.

However, most of what I’ve read in the mainstream papers on the subject is very pessimistic indeed, and often refer to the United Nation’s Human Development Report of 1999:

“Poverty is everywhere. Gaps between the poorest and the richest people and countries have continued to widen. In 1960, the 20% of the world’s people in the richest countries had 30 times the income of the poorest 20% . In 1977, 74 times as much. What will it be in 50 years’ time?”

I think that the whole world, in particular Africa, is therefore watching the US quite closely to see what answers they come up with.

Insight

Você fala Português?

February 5, 2014 rachel_eaton

Sarah Caddy

If you can’t, chances are you’re missing out, was the message from OMFIF’s conference on the ‘Role of Portugal and the UK in Lusophone Economies’ (February 4^th 2014, London).

Addressing a roundtable of business owners and potential investors looking to expand into Angola and Mozambique, João Alves, Partner at EY, listed the benefits enjoyed by Portugal as a result of its 500 years of common history with the rest of the Lusophone world. Reporting on the findings of his firm’s Attractiveness Survey 2014, which tracks 200+ investor perceptions, Mr. Alves detailed that:

58% of interviewees believe Portugal will improve over the next three years (marking one of the strongest scores for a European country)
95% of investors in Portugal today believe that they will still be doing so in five years’ time

And the reason that investors gave for these bullish views? That Portugal has such strong cultural and linguistic affinities with emerging markets.

With Angola and Mozambique both clocking in over 7% GDP growth, this interest is unsurprising. And despite the oil sector continuing to dominate – it currently accounts for 96% of Angolan exports, for example – the panellists and government representatives were unanimous in providing evidence of rapid sector diversification. Agriculture and telecommunications were two of the most regularly cited, with government agencies like ANIP (@ANIP_US) providing incentives for many non-oil sector businesses.

The swathe of positivity did come with a dose of realism from international law firm Miranda – in Angola, the only real way for a foreign company to build a business is via a local partner. At least the attendees of the conference now have the contacts to do so.

Monthly Archives: February 2014

Will Equity Crowdfunding have the power to revolutionise the way in which entrepreneurs seek finance in the future?

Africa Trivial pursuit: What sector is the second largest employer in Nigeria?

Rising Inequality – Impact on Africa?

Você fala Português?

Part of The Wilful Group