Crowdfunding for Projects in Developing Countries

For discussion purposes.Prepared by Chris Gossyechris.gossye@gmail.comJune 2015

Foreign Direct Investments in Developing Countries are the most important lever for growth

Given the appropriate host-country policies and a basic level of development, FDI • triggers technology spillovers • assists human capital formation • contributes to international trade integration • helps create a more competitive business environment • enhances enterprise development. All of these contribute to • higher economic growth, which is the most potent tool for alleviating

poverty• improved environmental and social conditions in the host country by, for

example, transferring “cleaner” technologies • more socially responsible corporate policies

OvO has 2 business models B2B is the FDI component

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DONATIONS to projects managed by NGOs• 130 Belgian Enterprises• projects sourced from 8 NGOs • 800K€/y

DIRECT INVESTMENTS (LOAN/CAPITAL)to projects of Local Enterpreneurs. • Loans, Capital, Expertise • One to one match making with limited

‘sales’-force • Projects sourced form Bidnetwork• 15 projects / year • 250K€/y

What’s the problem with direct investments today ?

Proposal to extend the current B2B business model into P2B

NEW

EXISTING

ADAPT

For discussion

Private Investors behaviour is changing

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Megatrends that influence investors behavior: 1. Personalization: investors want a customized / self-made investment

solution 2. Relevance: investors want to invest in relevant projects, they prefer

real economy 3. Transparency: investors want to understand where the money is

going, how it is being spent, how the project evolves 4. Simplicity: investment proposals should be easy to understand 5. Decision Speed: digital access to info and fast decisions6. Influencers (peers) have more impact than experts

Investors act more and more: 7. Globally: all projects that comply to the above rules are eligible8. Risk/Return realism: they are willing to take ring-fenced risks in

return for higher yields

Crowdfunding is a channel that fills in private investors expectations

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1. Personalization

2. Relevance

3. Transparency

4. Simplicity

5. Speed

6. P2P advice

1. Investors can compose their own project portfolio

2. Real projects in a real economy, endorsed by major brands

3. Real people, clear business cases and project cards. Follow-up info on results year after year.

4. Should fit into the world of internet communication

5. Digital access to info and fast decisions

6. Timeline of Capital raised, # of subscribers etc. converts the more reluctant investors

100%

Non-Financial26%

Donations 6%

Gofundme+45%

Rewards20%

KickstarterUlule.frr+127%

Financial74%

P2P Lending

45%

Zopa+133%

P2B Lending/Equity

29%

MyMicroInvest+270%

BoleroAngel.me, crofun,

lookandfin , finicrowd …

Growht figures of Crowdfunding confirm the analysis

(Source: MyMicroInvest)

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Slide Library v1

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Crowdfunding is global

A selection of DC projects can compete for int’l investors money

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Slide Library v1

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Wrap upWhat’s in for the stakeholders …

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• Private Investors: SRI diversification of portfolio, easy to understand projects, follow-up reporting, emotional involvement factor

• Projects: private financing can complement business financing for eligible projects

• Investment Funds: risk diversification, sales volume • Crowdfunding service provider: sales volume and improved

ROCE• Ondernemers voor Ondernemers: total funds raised, pre-

screening by crowdfunding members, brand recognition • Financial Partners (Banks, Insurance Cys …) integrate the SRI/DC

offer into their value proposition catalogue

Let’s join the action

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MyMicroInvest has opened it’s website for all new project proposalshttps://fuente.mymicroinvest.com/#!/authenticate so let’s introduce 1 or 2

OvO/B2B projects that can compete with the current crowdfunding projects.

This market test will allow to measure the level of interest of investors for this kind of projects.

Appendices

Notes from 1st contact round • How can we make sure that the projects who have received the funds are on

track ? • Enterpreneurs for Enterpreneurs should be the ‘representative’ / ‘white label’

for the DC projects when presenting them to investors. This idea could go as far as Efor2 bunddling a number of projects into one global investment offering, thus reducing costs of go 2 market.

• It helps a lot to have the African Enterpreneur(s) life or via skype for the fundraising tour.

• Crowdfunding investors decide impulsively / emotionally (probably more) than rationally. The crowdfunding campaign, when successful at the start, also attracts more reluctant investors at the end of the campaign.

• Crowdfunding should be looked at as part of a global (structured) financing plan, starting with FFF then venture capital then P2B loans, then banks …

• Crowdfunding comes with more costs – the tagline ‘100% your investment” has to be restricted to B2B.

• Crowdfunding is ook van toepassing voor gifts – er zijn gespecialiseerde crowdfunding platformen voor gifts/rewards (cf Ulule.fr)

• Een gezamenlijke aanpak met gelijkaardige organisaties aan Ondernemers voor Ondernemers is mogelijk / wenselijk (cf Autre Terre)

Contact listName Function Company

Freddy De Mulder Coordinator B2B, Lid raad van Bestuur

Ondernemers voor Ondernemers

Björn Macouter CEO Ondernemers voor Ondernemers

Luc Bonte Voorzitter Raad van Bestuur Ondernemers voor Ondernemers

Chantal Kamatari CSR Manager BNP Paribas Fortis

Claude Van Baelen CSR Manager BNP Paribas Fortis

Chris Wouters Business Development Mgr Corporate & Public Banking

BNP Paribas Fortis

Nicolas Fiatieff Marketing Director BNP Paribas Fortis

Vincent Oury Directeur Autre Terre asbl

Roland Nobel Co-founding Partner MyMicroInvest