A new UK entrant is looking to carve out alternative investment opportunities within emerging markets.
Emerging Crowd is a newly launched alternative finance platform that will funnel both equity and debt funding through to emerging markets based businesses. Retail investors in the UK will be able to gain access to curated deals for as little as £500 a pop. The management team has identified what they perceive as a sizable gap in the financial ecosystem – occupied by frontier market companies that can no longer rely on funding from friends and family, but which are not yet large enough to contemplate the capital markets.
The platform’s Co-Founder, Lucien Moolenaar, explained:
“Frontier and emerging markets can offer investors significant growth and income as part of a diversified investment portfolio. Emerging Crowd allows investors to access individual growth-stage companies that would not otherwise be accessible. We combine best practices from private equity, capital markets and crowdfunding, including extensive background checks, thorough due diligence and unparalleled disclosure on every deal. We also require companies to provide quarterly and annual updates, allowing our members to monitor their investments and see the impact they are having in these rapidly growing markets.”
Emerging Crowd lends its weight to the recent drive for an increased sense of professionalism within the equity crowdfunding sector. The platform will generally work with established companies, as opposed to focusing on the pure-startup space. A team of experienced analysts will visit prospective fundraisers within their respective markets in order to gauge the viability of an investment proposition. A huge amount of work has gone into ensuring that Emerging Crowd’s cross-border investment model is fully compliant, and that UK investors will be offered suitable protections in spite of investing overseas. The platform’s private investors will acquire shares with the same set of attached rights as those held by the fundraising company’s founders. Currency exchange issues have been accounted for.
The platform is also placing a firm emphasis on transparency and accessibility. Private investors will be able to peruse detailed financial documentation before investing, and can contact the management teams of prospective fundraisers if they wish. Post-investment, as referenced by Moolenaar, the platform allows for engaged portfolio monitoring by insisting on regular shareholder updates.
First through the door for the new platform are African iTunes-alternative “Bozza”, and what’s being dubbed as the Nigerian Startbucks: “Neo”. Both are trying to raise equity and both are seeking to raise £500k. Emerging Crowd will fund deals of anywhere between £500k and $4m in size. The new platform’s management team claim to have a promising pipeline of pre-screened companies ready to go live in due course – a strong testament to demand levels within their target market.
The only potential competitor that springs to mind within the alternative space is Netherlands-based Lendahand. The debt-oriented funder has been making affordable loans to entrepreneurs in Columbia, the Philippines and Ghana – returning between 3%-4% to its private investor base.
Emerging Crowd has made no secret of the fact that it presents a fairly risky proposition to investors. Its target fundraisers dwell in frontier markets, they are unlisted and mini-bond packages will be unsecured and typically illiquid. In accordance with FCA protocol, you must be a self-certified “sophisticated investor” in order to plough cash into the platform, and retail investors will of course be constrained by the 10% rule.
After having initially targeted an October 2014 launch date, the platform delayed its arrival in order to fine-tune what is an unusual and exciting proposition in equal measure. Now live, Emerging Crowd Co-Founder Will Tindall clarified his vision:
“Our aim is to build an online community of investors who are passionate about the exceptional growth opportunities available in frontier and emerging markets. Until now the vast majority of investors have had no way to reach these types of companies, let alone consider buying a stake in them.”
“We’re committed to investor protection, and all companies on the platform are subjected to world-class legal and commercial due diligence, conducted by Emerging Crowd’s team of experienced investment analysts and external legal and due diligence specialists. The minimum investment in any opportunity is £500, and investors pay no fees to the Platform.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.