A warm welcome to another session with Tife on our blog posts. What is making the media rounds recently is the new regulation on crowdfunding by the SEC (Securities and Exchange Commission) for farm investments. I thought to educate you on some things you should know as your trusted investment pal. This is essential to help you allay any fears and encourage you that your investment plans with us are secure.
CROWDFUNDING AND AGRIC-TECH INVESTMENT
Crowd funding is the use of small amounts of capital from a large number of individuals to finance a new business venture. It makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together, with the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives and venture capitalists.
Most farm investment companies usually called agric-tech take up the crowd funding opportunity owing to the fact agriculture projects can require a large amount of capital that can exceed the investment thresholds of smaller investors. Crowd funding can give smaller investors the opportunity to participate in promising agriculture ventures of different sizes and in different parts of the world.
A second reason is that crowd funded capital has the ability to fill the often large space between debt financing and equity investment. This space exists because the time it takes to arrange equity financing often significantly exceeds what food production cycles require, risk and return mismatches and disconnects that often occur between food production and profitability cycles and investor capital deployment and capital return timing expectations.
WHAT ARE THIS NEW SEC GUIDELINES?
Some of the things listed in the new regulations as regards crowd funding as follows;
* Only SMEs or MSMEs with pay-up capital of 100million naira and two years of operations, will be eligible for crowd funding.
* The maximum amount that can be raised through crowdfunding ranges from 50million to 100million naira depending on business type.
The Rules provide some restrictions and prohibitions on crowd funding portals and intermediaries such as:
- Directly or indirectly sponsoring or soliciting for investors to invest in offers listed on its own platform.
- Cross ownerships between intermediaries and issuers.
- Financing an investor to purchase an investment instrument.
- Investors cannot transfer their securities or investment instrument for a period of one year except they are transferring to the issuer, an institutional investor or a part offer for sale registered with SEC.
FARMBUDDY AND THE SEC GUIDELINES: Farmbuddy, as a subsidiary of Butren Investment is well abreast of these new guidelines and are up to par with them; therefore we are well qualified to serve you and you can rest assured that your investments are safe with us. We do not take your trust and patronage for granted: it is highly appreciated. So I’d love to keep this really short and leave you to carry on with your day’s activities. Thanks for stopping by. Please keep safe buddies.