Sunday, May 24, 2015

Crowdfunding expands to global and emerging markets

The potential investment gains to be made in 

emerging economies can be huge. A new crowd funding 

company Emerging Crowd is focusing on such frontier 

markets to offer UK investors a chance to do so.

Piggy bank held up around awaiting depositors
Aim high: harness the power of crowdfunding to invest in the property market Photo: (c) Don Bayley

The nature of money and capital is changing 
as quickly as everything else. Cryptocurrencies, 
business funding, banking and coinage are blurring 
into one big accelerated charge across the Rubicon. 
Financial phenomena such as M-Pesa’s mobile 
banking platform in Kenya where 42 per cent of 
GNP is conducted, Bitcoin’s digital peer-to-peer 
currency and even ‘old’ platforms such as PayPal 
mean money is now something else. The currencies 
we now deal in can range from ‘favour economies’ to 
microlending and even using a (Apple) watch to 
Not only is it confusing, it is also opening new 
opportunities for businesses to trade in. One such 
well-known platform is crowdfunding where companies 
raise money from many small investors, instead of 
relying on the, frankly, unreliable largesse and 
blockbuster model of venture capitalists and banks. 
There have been notable crowdfunding successes 
such as the oft-mentioned Pebble Watch, but umpteen 
fails such as those investing in games development. 
However, crowdfunding seems to have hit critical 
mass and looks as if it’s here to stay. 
Above: the Pebble Watch was a crowdfunding success
Like anything new, crowdsourcing is beginning to 
fracture into different shapes from its initial rewards-
based model. Equity crowdfunding where companies 
offer equity stakes in exchange for investment, instead 
of prizes, have been highly successful in the UK, 
spearheaded by companies such as Seedrs and 
Two months ago, there was further fragmentation 
when Eureeca (terrible name, interesting business), 
self-described as the ‘first global equity crowd funding 
platform’ received regulatory approval from the UK’s 
Financial Conduct Authority. This means UK-based 
SMEs looking to enter the Dubai market can access 
to capital and expertise from local investors. 
Founded in Dubai by former investment bankers, 
Eureeca’s FCA approval offers new geographical 
opportunities for crowdfunding; a market the company 
expects to reach $90 billion by 2025. 
“UK- and Europe-based SMEs with ambitions of 
entering the Gulf can now access capital and expertise 
from investors in the region. In the same vein, businesses 
in the Middle East seeking to expand into the UK will be 
able to secure capital through investors there,” said 
Managing Director, Sam Quawasmi. 
Another interesting crowdfunding company in this space 
takes Eureeca’s example further. Launched last month, 
Emerging Crowd is a UK-based investment crowd funding 
platform that offers users equity (and debt) investments 
in unlisted emerging and frontier market companies. 
The platform enables growth-stage businesses to raise 
up to a maximum of £4 million in a 12-month period. 
One of the earliest companies to crowdfund on its platform 
is Cape Town-based company Bozza, a digital distribution 
platform where artists can connect with fans who want 
locally relevant content via their mobile device and desktop. 
Above: Bozza used Eureeca to crowdfund on its platform
“We chose Emerging Crowd because they are the 
first platform that focuses on companies that operate 
out of emerging frontier markets. They are an exciting 
platform that links ambitious, well-run companies 
seeking finance with international investors pursuing 
the potential higher returns from frontier and 
emerging markets,” said Emma Kaye, CEO Bozza Media. 
Crowdfunding, however, in whatever form it comes 
now or is likely to transmute in, is not a panacea to 
growing and funding a company. As previously 
mentioned, for every Pebble Watch funded, there 
will be many who fail to raise their targeted money 
and will be forever associated with such a fail. 
Those who do fail and go back to raising traditional 
forms of funding are unlikely to be welcomed back 
with big bags of money from VCs and banks if their 
crowdfunding campaign was unsuccessful. In essence, 
their businesses will be lucky to survive. 
But like with new forms of money, new forms of 
business funding will mean there will be winners and 
losers, both for the investors and the ones chancing 
their arm. What else would you expect if the 
crowdfunding market does reach $90 billion over 
the next decade?

Saturday, May 23, 2015

Who should buy Netflix and why?

By James de Rin

Here’s a clue. If you haven’t read “the everything store” [the book on the story of Amazon] by brad stone then you should. On page 376 it says “Jeff Bezos was tracking a firm [Netflix] he viewed as a potentially dangerous new rival.” And this was in 2008. Boy was he right. Fast forward to May 2015 and Netflix stock is oscillating between $613 and $635 a share, insane making it a $50 billion dollar company. But then Amazon’s stock price has gone nuclear as well at $428 a share up to $200 a share since Christmas 2014 making Amazon a $200 billion dollar company.
So you know the story Netflix began with CD’s and DVD’s in a red envelope that you paid a monthly fee and watched numerous films within that price package. With the advent of faster broadband technology Netflix introduced streaming and the rest is history. Currently with 50,000,000 members and growing it is expected to go to $720and eventually $1000 a share. So who do I think should buy Netflix? Well the answer is Amazon but Bezos should lead the next chapter in streaming content by adding crowd funding.
1.     Discs by mail.
2.     Streaming content $9.99 a month.
3.     Invest in content as per Indigogo and Kickstarter and create more content for the platform.
Amazon Prime is a great platform and deal for content viewing and free with the Prime membership but let’s face it the Netflix platform blows it away. Content on Amazon is good sometimes better than Netflix but not original content, “House of Cards” anyone. Netflix allows you to automatically view each episode…
So Bezos should buy Netflix by buying up the stock and merge Amazon Prime movies with Netflix and keep the Netflix business model say $9.99 a month globally. Times that by 150,000,000 people that’s the eventual market and you get $1.5 billion month revenue!!!

One library just think of the negotiating savings, think of the Netflix platform, think of the 200 million customer reach, think of the one thing Amazon has not created which is the most important part of a store? The banking or the bank. They have Amazon payments which used to take the money for Kickstarter as the payment system for rewards. Now movies, or TV or just content has to be continuously created by Netflix, Amazon Studios, Hulu, HBO for the public’s content appetite and the biggest cost of that is buying content and creating it which drives membership and retention.  What if the public indirectly funded their own content by investing in things they like? Algorithm cash vestor! Oh and Amazon owns the server network that Netflix uses to stream its content. AWS…which is a $2 billion division of Amazon.
So to repeat
1.     Discs by mail.
2.     Streaming content $9.99 a month.
3.     Invest in content as per Indigogo and Kickstarter and create more content for the platform.
4.     Netflix financed by membership and crowd funding.
5.     Crowd Source Capital the crowd funding bank for content…
6.     Then Amazon should buy Kickstarter and Indigogo!
7.     Then you have a self-fulfilling prophecy of constant content creation and content to stream on top of commissions and acquisitions.
8.     Then the everything store really could be called the everything store when it starts selling money Wonga with a soul and disrupts the banks for the customer!
9.     Consolidation of content streaming players coming soon!

Or should Apple buy it and invest in crowd funding? I’m still betting on Jeff Bezos.