Benefits of Crowdfunding as a Source of Capital

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Friday, May 22, 2020 / 08:53 PM / NASD Plc / Header Image Credit: European Crowdfunding Network


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In our newsletter last week, we continued our series on Crowdfunding and highlighted the importance of regulating Crowdfunding as a source of capital for Start-ups and the possible consequences if the space is left unregulated. Click here to read more.

 

Crowdfunding has a lot of benefits to the entrepreneurs who use it, whether looking to raise funds for achieving business goals, expansion or gather helpful feedback from potential customers and backers. In this week's edition, we shall discuss the accruable benefits to MSMEs who seek to raise capital via Crowdfunding.

 

1.    Sourcing for Capital to Bring Ideas to Fruition

Every idea requires resources to become a reality. Before crowdfunding, entrepreneurs faced a long and difficult road to secure funding. Their options included applying for bank loans, searching for government grants, pitching venture capitalists and angel investors, borrowing money from family members and friends or tapping into their savings. Crowdfunding, however, provides a method to obtain the funds needed to launch an idea quickly and with the support of an engaged community.

 

2.    Gaining Insights from Experts

The traditional path from concept to market is time consuming and expensive. Crowdfunding is often a more efficient way to gather feedback and find valuable marketing insights. In many cases, insights from prospective Investors helps entrepreneurs to refine their ideas, think through their strategies and proffer solutions that make a bigger impact.

 

3.    Customer Retention

A good crowdfunding campaign can help enhance an entrepreneur's business visibility, validation, and trust. When interested investors fund your campaign, it enhances interest and trust in your project. This demonstrates that potential customers believe in your idea or vision and have a real financial interest in sharing and empowering your success. Ultimately, this helps entrepreneurs learn the importance of customer retention.

 

4.    Accessibility, Affordabilty and Efficiency

Crowdfunding is streamlined by using regulated platform that supports crowdfunding. Crowdfunding platforms usually do not charge a setup fee and will only take a small percentage of funds raised. Leveraging a crowdfunding platform to reach a broad audience allows entrepreneurs focus on building the business rather than trying to figure out how to find big investors, get an introduction and present your pitch.

 

5.    Retaining Control of Your Business

Crowdfunding affords the entrepreneur the opportunity to structure its business in such a way that they maintain 70% ownership/control of their business.

 

Conclusion

NASD is positioned as the right platform for your project, you can tell the story of your business and enjoy the benefit of having potential funders find you. It's more efficient than traditional fundraising.

 

Year-to-Date Overview 

NASD OTC Securities Exchange Market closed on a negative note this week, as the market recorded a decrease in performance. NASD Security Index Year to date return fell by -1.29%. Total volume traded Year-to-Date stands at 7,618,340,886.00 units in 568 deals and total Value traded is N7,459,326,983.88.

 

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Week 21 Overview

 

NASD OTC Securities Exchange closed the week with a negative return in NSI. The NSI return fell by -0.78% to close the week at 688.51 points against 693.94 points in the preceding Friday, May 15 2020.

 

In addition, Week 21 saw NASD Investors lose N4.00 Billion in value. NASD OTC Market capitalization closed at N505.76 Billion compared to N509.75 Billion in the preceding Friday, resulting from a negative movement in prices.

 

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There was a 157% increase in the total value traded during the week as week 21 saw NASD Investors trade a total of N24,898,546.00 in value compared to N9,671,300.00 in the previous week. Total trade activity for the year is valued at N7,459,326,983.88.

 

In the same pattern, volume traded during the week was 620,727 units compared to 73,715 units in the previous week leading to a 742% increase in trade volume compared to week 20. Total volume traded for the year is 7,618,340,886.00 units.


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Top Traded Securities by Volume

 

The week closed with Lighthouse Financial Services Plc Ranking top among top five most traded securities by volume and VFD Group Plc as the least traded among the five most traded in week 21.

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Top Traded Securities by Values

 

The week closed with Niger Delta Exploration and Production Plc Ranking top among top five most traded securities by value and FrieslandCampina Wamco Nigeria Plc as the least traded among the five most traded securities by value in week 21.


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Guess Who Gains!

 

There were no Advancers during the week even though week 21 seemed to have witnessed increased trade figures. The week saw its trade volume and value close the week with an upward spike compared to week 20.

 

Big Stocks Decline!

 

One of NASD OTC big stocks close the week with a negative decrease in value. Niger Delta Exploration and Production Plc which currently holds a Market Capitalization of N48.98 Billion closes the week at N270 representing a -7.53 percent decrease from the previous close of N292.

 

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Virtual Induction of New Authorised Traders

 

NASD Congratulates her pioneer virtual inductees

 

NASD carried out her first ever virtual induction of traders into the NASD OTC Securities Exchange market, participant were:

 

Oluwagbenga Magbagbeola of ARM Securities Limited and

Bolaji Eyitayo Samuel of Reward Investment and Services Limited.


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  2. Benefits of Leveraging on Crowdfunding for MSMEs
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