Crowdfunding a focus on technological transfer and Africa Pretoria 24th of november, 2015 Cyril Rollinde, Member of FPM Cyril.rollinde@arandi.org www.fpmed.org
+ FPM Our mission Promote crowdfunding in Mediterranean region Support its appropriation by ecosystems and territories We are gathering Experts and crowdfunding platforms Civil society Finance and local development professionals Public bodies Our actions 1 ères Annual meeting about crowdfunding in the Mediterranean region, 5th november 2014 A participatory survey about crowdfunding in the Mediterranean region 1st national congress of crowdfunding in the Mediterranean region, in a southern border of Mediterranean sea, 1st semester 2015
+ What is crowdfunding
+ In the context of the «collaborative economy» 4 Start in the artistic area Extension to banking, subsidies Link to a willigness of transparency, proximity (choose one own project, directly decide where to focus the savings Numeric revolution, transforming our usages
+ How does it work 5
+ How does it work 6
+ How does it work 7
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+ Different kinds of crowdfunding 9 From the less risky and less «return-expectation» to the most risky and return-expectation Gift without or with rewards Loan without or with interest Investment against royalties, convertible bonds, equity
+ Why using crowdfunding for gift? 10 Gift without rewards For NGOs (99,5%) in humanitarian (39%), teaching (22%), culture (14%), health (13%) and environment (12%) Average collect (all figures are for France) 3 000USD per project ; 69USD per donor Why? Feel the cause Gift with rewards For Individuals (49%), NGOs (31%), companies (18%) Usually B2C projects in entertainment, music (36%), live, arts, journalism and publishing, humanitarian Average collect 3 800USD, success rate of 65% ; 58USD per donor Why? Like the project, the team ; want to be the first to get the Pebble clock
+ Why launching a gift campaign? 11 Can be used as a Market survey A real communication campaign, using network, internet, media to attract new clients and partners First stone of a community management strategy Leverage on other source of finance Reward? Can be symbolic (recognition), be part of the journey/challenge, sample of product/service/pre sales Be careful with the ful cost of reward, including transport
+ Gift platform 12 Jakat Allies
+ Crowdfunding for loans 13 Loan with interest Mostly for companies In services (36%), trade (26%), industry (13%) Average collect 97KUSD, average loan 370USD Why? What if I was using part of my saving to support a local company and get a small return Loan without interest For companies, usually from social economy, entrepreneurs in southern countries, students Average collect 1 080USD, average loan 91KUSD Why? I like to support this new business but do not want to get revenue out of it
+ Why launching a loan campaign? 14 More mature companies (usually, 2 balance sheets are requested) Easier and more flexible than banks no warantie, less delays Sometimes, business support from the platform Leverage effect a successful crowdfunding campaign will strenghthen the confidence on the projects by banks and investors Market survey the campaign can help recruting future clients Regulation depends on countries
+ Examples of loan campaign 15
+ Platform of loans 16
+ Crowdfunding for Capital 17 Companies only In trades (28%), services (17%), health and research (17%), environment and enery (16%) in France Average amount collected 436KUSD, average amount invested 4 000USD Motivation I like taking risks, I will invest in a projet I like and where I can be active Regulation?
+ Why launching a capital campaign? 18 Finance development with a flexible tool Advice and support from shareholders Finance enterprises that are less considered by regular investor or to finalize a «tour de table» Commercialization acquire new clients
+ Investment platform 19
+ Conclusion 20 Gift is the easiest way to start for a platform online, open sources resources, less regulation, more projects But doesn t fit all the needs, and risk of too many platforms critical mass Few gift platform are transforming into investment or loan platform Objective and methods are similar market survey, desintermediation, gather many small sources of money
Challenges for crowdfunding (for the roundtable, 23rd) 21
+ Crowdfunding, an innovative way of financing technological transfers How to finance technological transfer from public universities? A gap among others Many interesting projects from public universities are not financed Public support is focusing on «fashion» researchers and topics Generating knowledge process is long and tough, and yield is difficult to predict
+ Crowdfunding, an innovative way of financing technological transfers How can crowdfunding be part of the solution. Like for start ups: Decentralized process, all projects eligible New criteria of interest for projects. ROI and number of publication no more the only criteria! Ease the spreading of new idea and research idea to a larger audience Promote an «open science»
+ Crowdfunding, an innovative way of financing technological transfers Still some open question How to select projects? How to go over negative data effect? Industrial property Adapted only to gift, more difficult for investment In order for crowdfunding to be efficient, like for start up, there are 2 needs: The researcher has to mobilize his own community To go over his own community, the project has to have a strong emotional impact (concrete product, bio/green project )
+ Some initiatives of crowdfunding for technological transfer Video sur une expérience dans la recherche médicale
+ Crowdfunding in Africa Figures and experiences 12MUSD, 100% of growth (3,26Mds USD in Europe, 9,4Mds in South America, 9,45Mds USD in North America, 43MUSD in Oceania, 40MUSD for KisKissBankBank platform only for example) ; 5 000 less than fund transfers from diaspora to Africa (67Mds USD) Strengths 90% activity in SMEs, 50% cropable land (ettres arables) of the world in Africa, 50% of the african population is less than 25 years old ; experience of «tontines», of international transfers ; 250M people in middle class ; 90Mds per year of financial needs (source Afrikwity) Many gift platefomrs, with open source tools, pluged to a payment gateway. Lead to platform with few animation, little collect, few professionalism from «techies» and not able to scale or develop into equity or loan model. Sometimes entrepreneurship is seen as the miracle tool for african development ; and crowdfunding as the miracle tool for entrepreneurship when other sources of finance are not available! One continent? 2 area french speaking and english speaking. The french speaking area is mostly following french model in term of regulation and usage (what is not authorized is forbidden). The other way round in english speaking area, making things easier for equity models. But entrepreneurship dynamism and one homogeneous monetary area in french speaking Africa South Africa is on third of the african GDP
+ Crowdfunding in Africa Specific issues Low «bancarisation» - less than 24% of the population is owning a bank account Low rate of computer equipment but 80% of the population has a mobile phone. The future of crowdfunding is lying in mobile (see mchanga, Orange) The foreign aid had created habit of little self-support by countries. Many platforms are today relying on diaspora and are based in Europe or the US Difficult to understand innovative way of finance like crowdfunding, entrepreneurs don t know well this tooll No legal framework adapted to crowdfunding European or US plateforms sometimes reluctant to support african projects Challenges and idea Diaspora for example Zoomal in Lebanon. Some plateforms based in Africa are relying on diaspora for savings collection (eg Zoomal in Lebanon) ; some plateforms are based in the US or Europe for legal reason and to increase their access to savings. It is said that relying only on diaspora is a weak situation but that converstion rate from diaspora is much higher than from local investors (leading to a reduced acquisition cost!)) Pan Africa crowdfunding being dematerializd, it allows a larger coverage of area At the same timep, a strong local network is recommended Matching fund by CSR or multi/bilateral donors (Co Fundy, Zoomal) Verticals some new verticals (real estate with Realty Africa ; energy, green Sunfunder, Lendosphere, Ecofund au Senegal ) Liwwa respect charria, buy equipment Transfer regulation from Europe or US in Africa Main issue remains to find projects important to have local contacts
+ 28 Gift Worldwide platform with action in Africa From abroad, dedicated to Africa From Africa Loan Equity
Intervenants : Contacts : Thameur HEMDANE, thameur@fpmed.org / +33609037472 André JAUNAY, andre@fpmed.org / +33671174402 Site web : www.fpmed.org
+ Annex - In South Africa Docs de synthèse, Good morning crowdfunding 15% internet access, less than 20% with credit card Exemples de campagnes - Specific issue : banking regulation. lutte contre le blanchiment all money transfers have to be done to get a product or a service. Make difficult gift by crowdfunding. Gift authorized if reward, or for NGO. Des plates formes Fundfind, don, all or nothing ou keep what you raise, 9% fees. Exemples festival de musique, HOPE foundation, film festival à Cape Town Thundafund, june 13, 4 years, impact social et économique, 347K$ collectés, création en 2013. Egalement des services de mentorship ; techno by buzzbnk. Wish to expand in africa. Reward based (pre-sell project related items), all or nothing. 105 projects funded, 3,9MR (270KUSD). Campagne 1 à 3 mois. 71% de succès. Focus on entrepreneurial thinking seed capital ; marketing and mentorshipe workshop Startme, entrepreneurial ou créatif, don. Entrepreneru, artistes, causes. Depuis 2011, créée par groupe d entrepreneurs sud africains
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+ Trends 33
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+ France (example of a market becoming mature) 35 + 750 000 investors under 1 year For 1 semester 133,2M raised (+100%) 24,3M in investment (+148%), incd 24,2M as capital 23,7M as gift (+24%), including 3,7 with reward and 20 without reward 85,2M as loan, inc 1,8M without interest and 83,3M with interest (61M individuals, 13M companies, 9,4M debt) +128% Mature market are shifting from gift to loan and capital. Loan is concetrating 68% of collect in 2014 57% are men 24% have revenue between 24 to 36K 60% have a saving less than 10K 60% in citiies of 200 000+ 44% less than 35 years Motivation: participate in development of projects otherwise not financed by banks ; control the affectation of their savings
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+ Keys for a successful campaign 37 Phasis of the project should be mature enough to communicate, ready to be launched, inspiring confidence Founder easy talker, available, motivated, creative Amount collected should be aligned with the community which can be mobilized Communication and diffusion strategy Cooperation with other financial institutions, banks especially Local, territorial cooperation with other players in entrepreneurship and local development