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Crowdfunding is often associated with small-scale charity drives, creative projects, or community initiatives. Traditionally, it hasn't been viewed as a viable option for business financing. However, a closer look reveals that the fundamental concept of crowdfunding—raising small amounts of money from a wide pool of stakeholders—has been a staple in the commercial world for a long time, albeit under a different name. The process of raising capital through an Initial Public Offering (IPO), expanding a company’s shareholder base, or securing financing through bonds is essentially a form of crowdfunding, but on a much larger scale.
Consider the example of how banks were able to turn to the public when the Central Bank of Nigeria (CBN) raised the minimum share capital requirement. Similarly, each year, Dangote Group taps into public funding to raise billions in commercial papers, while the Nigerian government issues bonds to finance its budget. These large enterprises know what the average sme is beginning to realize: the public is an efficient, reliable, and often inexpensive source of capital.
What sets crowdfunding apart, however, is its inclusivity. Unlike traditional business financing avenues, crowdfunding opens up new opportunities for small and medium-sized enterprises (SMEs) and individual investors alike. It allows businesses to raise capital from a broad base of stakeholders, while offering individuals a chance to invest in ventures they might not otherwise have access to, potentially earning a return on their investment. This means that not only businesses but also everyday income earners can tap into the benefits of entrepreneurship, creating a pathway for them to participate in the growth of small businesses and share in the rewards.
A significant shift in the landscape came in 2021 when the Securities and Exchange Commission (SEC) introduced new regulations that redefined the crowdfunding space in Nigeria, making it more accessible for SMEs. The new rules allow small businesses to raise up to NGN100 million at once from the public through licensed intermediaries, such as Growth Boosters. These intermediaries act as the marketplace for crowdfunding, much like stock brokers, but with an additional layer of scrutiny. Companies like Growth Boosters, a licensed intermediary, ensure that businesses are carefully vetted, providing a secure and regulated platform that benefits both investors and businesses alike.
For example, Growth Boosters utilises AI technology and human expert review to identify viable businesses, and appraise all requests for finance. By providing these essential services, Growth Boosters is playing a key role in facilitating safer investments while empowering small businesses to grow.
These regulations bring several key aspects to the table. First, crowdfunding platforms must be licensed and comply with SEC guidelines, ensuring that the market remains transparent and trustworthy. Second, businesses must provide detailed financial reports to help investors make informed decisions. This emphasis on transparency helps mitigate risks and increases investor confidence. Lastly, there are investment limits in place to protect investors from potentially devastating financial losses. By restricting how much an individual can invest, these limits reduce the risk of a single investor losing too much capital, helping create a more sustainable and secure crowdfunding ecosystem.
In summary, crowdfunding is no longer just an option for small-scale charity drives or creative projects—it has become a legitimate, regulated avenue for business financing. By allowing greater access for both businesses and investors, it is democratizing the way capital is raised and invested, providing new opportunities for wealth creation and financial inclusion.
About us
Growth Boosters is a SEC licensed fintech committed to providing accessible and affordable credit solutions to SMEs across Nigeria.
We are a pioneering crowdfunding platform that connects SMEs in need of financing with everyday income earners seeking attractive returns. Simply put, our model is similar to commercial papers that bigger organisations issue to the public. With financial inclusion at the core of our mission, we are aligned with SDG 1,7,8,9 and help small economic actors reach their financial goals.
For the SME, we help them curate attractive fundraising campaigns that are end to end digital, and provide access to a wide pool of ready investors. Through our web platform, we enable SMEs to raise capital on their own terms, with repayment schedules and interest rates tailored to their specific operational cycles. For the investor, we create a safe place to grow your income, putting you in the driver's seat to make impactful investments into Nigeria's economy.