“Praise the Lord!” blurted the preacher. “Hallelujah!” was the loud response from the congregation. “As the Lord says, give and it shall be given unto you, equal measure, pressed down, shaken together…” With that, the collection bowl was whipped out and the entire congregation filed one past the other to put in their “collection” for the day. The congregation (crowd) had just succeeded in funding a church project or, to play devil’s advocate, succeeded in funding the preacher’s family lifestyle for a month. The congregation came from far and wide – doctors, lawyers, cleaners, peasants – all had to give to feel that they had done something spiritually worthy.
Flip this scenario on its head and place a District Commissioner in place of the pastor. This time he asks the same crowd to contribute money to upgrade the community hospital that needs fixing or expanding. You will be lucky if you have one soul there! All will be waiting for government to do that one. As if “government” was one individual tasked with the responsibility of financing every public project. The idea of the crowd contributing in any small measure to finance a project is called crowd-funding.
Crowd-funding is the latest craze of seed funding for social projects, businesses, and now, property developments. I have been a student of this alternative form of raising finance for some years now. In fact, I started the world’s first crowd-funding platform for football and sports funding (http://www.footiefunder.com; http://www.sportyfunder.com) but had to put those on hold to pursue my passion of driving investments into Africa’s real estate sector by starting Property Investor Africa.
Why am I passionate about crowd-funding? Because I have always thought about how I can help change the system whereby only high-net-worth individuals have the opportunity to make more money from investments because of their connections or network, and because of their ability to borrow from traditional banks. Banks, as we know, will only lend you more money when you do not need it; banks do not like struggling businesses or start-ups even though they may see the potential. They will not help until you have found a way to help yourself. I know this because I have been there, done it, got the burn marks!
Crowd-funding and real estate
Crowd-funding completely opens up the belly of financing projects. In the UK, crowd-funding platform Crowdcube (http://www.crowdcube.com) is a leader in harnessing investments for businesses that may otherwise not have a “look-in” by the traditional banks. In just three years, Crowdcube, which brands itself as the leading investment crowd-funding site, has raised in excess of £30 million for businesses in the UK.
In the US, crowd-funding sites iFunding (https://www.ifunding.co) and Realty Mogul (http://www.realtymogul.com) are at the forefront of revolutionising how real estate projects are funded. Crowdfundproperty.com in the UK started recently. In fact I met some of its senior executives at a property show in London and I quite liked their enthusiasm. The big question though is, how can this new finance craze hit Africa where it is needed most?
Crowd-funding in Africa
In Africa, crowd-funding is not new. It is practised every day. The churches with their collection bowls/envelopes and community support networks all practice a form of crowd-funding. What is left is to formalise the process and make it a winning business platform for investments. Africa has a lot of infrastructure projects that are crying out for funding. The governments cannot do it alone nor the private sector. As the Americans will say, “we the people”, it is “we the people” who can help transform the economies of Africa through alternative funding mechanisms such as crowd-funding. After all, how much money does the African diaspora remit each year to Africa for all sorts of projects and expenses? In 2012 the African diaspora remitted in excess of $60 billion to their families. Why can we not channel some of these into financing infrastructural projects that will give good returns to investors and build the economies in Africa? Crowd-funding projects in Africa will encourage intra-African investments because it will not be about the geographic location of a project. It will be about the returns the project delivers to the investor.
Property Investor Africa
Property Investor Africa is being enhanced to serve as a crowdfunding platform to fund real estate and other infrastructure projects in Africa. Watch this space!
Quote of the day:
“Crowd-funding projects in Africa will encourage intra-African investments because it will not be about the geographic location of a project. It will be about the returns the project delivers to the investor”