• Latest
  • Trending
  • All
  • Startups
  • Funding
  • Sponsored
Crowdfunding - techbuild

What you need to know about Crowdfunding in Nigeria

1 month ago
Termii - techbuild

Termii, a Nigerian CPaaS Startup receives Investment from Future Africa

6 hours ago
Kumasi Hive - techbuild

Digital Artist? Register for Kumasi Hive’s Creative Enterprise Program

7 hours ago
Founder Institute
101 jpg 1 2 1

LakeHub is decentralizing Access to Technology and promoting Youth Entrepreneurship in Kenya

10 hours ago
Seed transformation program - techbuild

Apply: Stanford Seed Transformation Program 2021 for African Founders/CEOs

11 hours ago
Telecoming - techbuild

Telecoming partners Ounousa to distribute North African Women’s Digital Content

12 hours ago
5G - techbuild

Why Telcos should prioritize Efficiency and Sustainability in 5G Networks

14 hours ago
Afrilabs Annual Gathering - techbuild

The 2021 AfriLabs Annual Gathering to hold in Morocco

1 day ago
Google News Initiative - techbuild

Google News Initiative Innovation Challenge opens ($150 000)

1 day ago
defy

Defy opens Applications for African Innovators

1 day ago
Founder Institute - techbuild

Founder Institute opens Applications for its Virtual Startup Accelerator in Abuja

1 day ago
Hype PR BP IMG1 R1

Opera launches Hype, its New Dedicated Chat Service in Africa

2 days ago
Digital literacy - techbuild

Insights from Canon African Frontiers of Innovation reveal Vital need for Digital Literacy Skills

2 days ago
Founder Institute Founder Institute Founder Institute
  • Home
  • About
  • Partners
  • Advertise
  • Contact
  • Signup to receive updates
  • en English
    en Englishfr Frenchar Arabicsw Swahilipt Portuguesede Germanes Spanishzh-CN Chinese (Simplified)
Innovation | Startups | Funding | Tech Blog in Africa
Advertisement
  • Home
  • Startups
  • Hubs
  • Funding
  • Women Tech
  • Interviews
  • Blockchain
  • Forum
No Result
View All Result
  • Home
  • Startups
  • Hubs
  • Funding
  • Women Tech
  • Interviews
  • Blockchain
  • Forum
No Result
View All Result
Innovation | Startups | Funding | Tech Blog in Africa
No Result
View All Result
Home General

What you need to know about Crowdfunding in Nigeria

Guest Writer by Guest Writer
13th January 2021
in General
Crowdfunding - techbuild

Crowdfunding is a practice of raising money from a large number of people especially over the internet to finance a project or business venture.

Small and Medium Enterprises (SMEs) and entrepreneurs use this medium as an alternative source for funds although this is done in this context to the benefit of all involved.

Medical expenses, social welfare projects are also financed through crowdfunding.

There are various forms of the fundraising processes based on their purpose and they include reward-based, donation-based, equity-based and debt-based crowdfunding.

Reward-based offers a product or service to individuals who contributed.

These products and services have to be enticing to be able to garner the attention of the crowd.

Reward-based crowdfunding has a lot of benefits, it creates awareness for whatever project the crowdfund was carried out for and naturally people involved will actively inform others about it.

Donation-based crowdfunding is another popular type of crowdfunding, mostly done to solve a societal need.

Inequity-based, the individuals involved are given shares in the company while in Debt-based crowdfunding the money is eventually returned with interest to involved individuals.

SMEs or entrepreneurs that utilize these platforms do so by introducing their products to the market in form of listing, the crowd then forms their opinion about the product and then invests based on the investment options available.

Individuals who participate in the processes are mostly innovative oriented and risk-takers participate due to several reasons.

The three main strata of crowdfunding are the fund seekers, the crowd investors and internet platform operators and there has to be a level of trust and patience for the success of a crowdfunding project.

Crowdfunding bypasses intermediate financial institutions such as banks that serve as channels between investors and borrowers.

In the world there are over six hundred crowdfunding platforms, while widely used in developed economy countries it is scarcely used in developing countries, Nigeria not an exception.

It has a low-level usage in Nigeria as most times people are skeptical due to fear of losing their money or scammed.

In Nigeria, crowdfunding dealings involving security sales in the form of equity or loan are subject to Nigeria’s securities regulations.

In 2016, the Securities and Exchange Commission (SEC) suspended crowdfunding activities in Nigeria due to legal challenges.

There have been suggested regulations to running the process in Nigeria seeing as other countries have stipulated rules which help regulate both the amount an individual can invest per annum to how much can be raised on a platform per annum.

However, first any crowdfunding platform set to run its activities in Nigeria must be registered with the Security and Exchange Commission.


Also read, 6 Reasons you should consider Crowdfunding for your Venture


It is important to note that while ensuring the protection of the Nigerian public from fraud, these regulations should be flexible and not be overregulated so as not to discourage investors and issuers.

The Security and Exchange Commission, Nigeria has an eligibility standard for Micro, Small and Medium Enterprises ( MSMEs), which states that only MSMEs that are incorporated as companies in Nigeria with a minimum of two years operation record are eligible to raise funds through crowdfunding platforms.

There are general obligations for crowdfunding platforms some of which include, disclosure and prominent display of relevant information regarding the platform and its use, keeping investors abreast of any form of change to an issuer’s proposal, carrying out investors’ education programs amongst others.

Also in the regulation, no operator should discontinue the platforms without prior approval from the Security and Exchange Commission, Nigeria.

The platforms are also expected to monitor the conduct of issuers on their platform and take action against any misconduct, ensure that fundraising limits are not breached and also make both monthly and quarterly reports on the activities carried out on their platforms.

About the Author

Chibuzor Elizabeth Chijioke a graduate of Abia State University is a Nigerian-based entrepreneur and content writer. She trained as a digital marketer at Innovation Growth Hub. She is committed to teaching people how to apply technology to better their lives and businesses. She spends her leisure reading sci-fi and fantasy novels.


Don’t miss important articles during the week. Subscribe to techbuild.africa weekly digest for updates.

Related Posts

Telecoming - techbuild
General

Telecoming partners Ounousa to distribute North African Women’s Digital Content

12 hours ago
5G - techbuild
General

Why Telcos should prioritize Efficiency and Sustainability in 5G Networks

14 hours ago
defy
General

Defy opens Applications for African Innovators

1 day ago
Digital literacy - techbuild
General

Insights from Canon African Frontiers of Innovation reveal Vital need for Digital Literacy Skills

2 days ago

SIGNUP FOR UPDATES

RECENT

  • Termii, a Nigerian CPaaS Startup receives Investment from Future Africa
  • Digital Artist? Register for Kumasi Hive’s Creative Enterprise Program
  • LakeHub is decentralizing Access to Technology and promoting Youth Entrepreneurship in Kenya
  • Apply: Stanford Seed Transformation Program 2021 for African Founders/CEOs
  • Telecoming partners Ounousa to distribute North African Women’s Digital Content

PREVIOUS

Join Founder Institute Join Founder Institute Join Founder Institute
ADVERTISEMENT
Innovation | Startups | Funding | Tech Blog in Africa

© 2013-2021 techbuild.africa. All Rights Reserved.

  • About
  • Contact
  • WE-Forum
  • Blockchain
  • Privacy
  • Sitemap
  • Terms

Follow us

No Result
View All Result
  • Home
  • Startups
  • Hubs
  • Funding
  • Women Tech
  • Interviews
  • Blockchain
  • Forum

© 2013-2021 techbuild.africa. All Rights Reserved.

en English
en Englishfr Frenchar Arabicsw Swahilipt Portuguesede Germanes Spanishzh-CN Chinese (Simplified)
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.