Olisa Agbakoba Legal has identified crowdfunding as an alternative financing by which small businesses, corporate organisations and individuals can raise money from the general public through an online portal called a crowdfunding portal.
The theory behind this is that if a large number of people, referred to as the “crowd”, each provide monetary contributions then it is possible to raise substantial sums of money, without the need to go to traditional lending sources.
The alternative financing model is fast being used in Europe, the United States and Asia to raise capital for various financial and non-financial projects; of which today, there are about 1000 crowdfunding portals worldwide supporting a multi-billion dollar industry.
Speaking on the opportunities the model provides for businesses, the Partner, Corporate/Commercial/Public Sector Group at OAL, Mrs. Olabisi Akodu, said global crowdfunding experienced accelerated growth in 2014 to reach $16.2bn in the US, while the industry also raised over $34.4bn in 2015.
She said the crowdfunding market is made up of various funding models such as consumer lending, debt and equity financing for small and medium sized enterprises and donations for philanthropic causes.
Akodu explained, “Funds raised by way of crowdfunding ensure that small businesses have the credit to grow their business, which in turn creates jobs and stimulates economic growth. There are three broad platforms for crowdfunding – philanthropic and promotional that allow individuals and charities raise money for philanthropic causes and artist promotions through online donation portals.