We recently spoke about Lloyd’s capital adding a 3rd online share trading platform for those interested in listed investments in Zimbabwe. Lloyd’s capital has quickly moved and has announced another breakthrough in investment funding in Zimbabwe; a registered crowdfunding platform. This will come as music to the ears of many who have bemoaned the lack of viable crowdfunding infrastructure in Zimbabwe and how it limits otherwise good business prospects. The crowdfunding platform will operate in the Reserve Bank of Zimbabwe’s regulatory sandbox on launch. There’s a lot to talk about in this exciting development.
We have discussed crowdfunding before as it has become a credible source of funding for great ideas through places like GoFundMe and Kickstarter. Crowdfunding is also not new to Zimbabweans as in our history, at the family or community level we have used crowdfunding for events, weddings, school fees and many other pursuits. Admittedly one of the major limitations of crowdfunding in the way we have done it is the lack of a law to regulate it and the resolution of disputes or dealing with occurrences. That has not stopped Zimbabweans from trying to use crowdfunding in business.
Lloyd’s Corporate Capital
Lloyd’s Corporate Capital is a non-member institution of the Zimbabwe Stock Exchange and is registered with the Securities Exchange Commission of Zimbabwe. Lloyd Corporate Capital provides human, equity and debt capital as well as training and advisory services to medium-sized businesses in Southern Africa. You can find out more about the firm on their website.
In the face of an increasingly complicated fintech world with the arrival of blockchain technology and cryptocurrency, the RBZ established a regulatory sandbox on the 1st of March 2021. Here’s an explanation from an article we published at the time;
The regulatory sandbox concept was necessitated by the surge in the number of fintech startups looking to provide innovative digital financial products and services in Zimbabwe. This has obviously meant that these startups not only need support structures but also a smooth operating environment. It was with that in mind that the central bank, the Reserve Bank of Zimbabwe (Reserve Bank), decided to put together standard operating protocols. These essentially would inform and control the testing process of the respective tech in question. An operating environment that is regulated makes testing and rollout of fintech much easier. This would also ensure that only relevant fintech that is suited to existing problems gets approved. The concept also was a result of seeing the need for fintech to be in sync with the mainstream financial sector.
As the saying goes “the devil is in the details” and so it is with Lloyd’s crowdfunding platform. We will go through some of the more important details in brief
Debt and Equity
Promoters (businesses) can seek both debt and equity crowdfunding on the platform in both cases a minimum period of 6 months applies. The businesses must have operated for 2 years before seeking crowdfunding and they will be assessed and rated by Lloyd’s Capital before the public is allowed to invest or lend.
US$1000 -US$500 000
Businesses seeking funding can raise anywhere between US$1000 and US$500 000. The promoter is allowed to set targets of minimum (lowest amount acceptable), ideal (the amount they would like to raise) and maximum (the highest acceptable amount. If the minimum is not reached funds will be returned to investors/lenders who had put money forward.
Open to individuals
One of the main highlights is that the funding side is open to individuals as well as corporations, pension funds, syndicates, consortiums and any other units recognised by law. While investment is open to more than one project at a time per funder there is a minimum US$1000 investment amount but there is no maximum.
The default period is 21 days
The default funding period is 21 days, this means promoters have 21 days to reach their minimum or the funding round will be closed. Funding rounds will be closed within 24 hours of the promoter achieving their ideal amount. Lloyd’s capital may offer an extension in some cases depending on the promoter’s project.
Lloyd’s will act as custodian
All funds will be paid to and from Lloyd’s capital as a custodian. So while the funding round is open Lloyd’s will hold funds for the promoter. Once the funding goal has been reached they will forward funds to the promoter and will facilitate interest payments on the debt in the same way. This is an important feature as it takes care of one of the biggest concerns.
We certainly look forward to seeing both Lloyd’s crowdfunding and the regulatory sandbox in action. This establishes a good funding platform for businesses while also offering those with excess funds a wider variety of investment opportunities, something Zimbabwe has sorely lacked. You can find out more at https://www.lloydcrowdfunding.com/