What are the campaigner benefits of crowdfunding compared to other financing alternatives?

Stock crowdfunding involves multiple investors providing ownership of the shares, and the funds can be used to expand and grow your business. Compared to traditional investing, an important difference is that everyone can become an investor. For example, companies can invite existing customers or followers as future investors. For entrepreneurs applying for crowdfunding financing, there is an additional advantage: Investors bring valuable knowledge and contact can become the most beneficial business opportunity. You can find dedicated advisers, evangelists, and even potential board members among investors. Through public platforms, investors can invest in companies with huge potential to diversify risks.

What kind of entreprises could use the Funder platform?

Funder is ideal for Kenyan businesses that develop products, technology, computer games, IT products, energy or green technology solutions, or are looking to expand internationally.
Funder is available to all businesses in Kenya that are registered as private limited companies (LTD) and participate in lucrative and legal commercial activities.
Crowdfunding in the energy sector is a fantastic example. These are organizations with the primary goal of producing and distributing power and heat via a local network, based on a similar location or other mutual interests. Energy organizations assist communities in becoming energy self-sufficient, maintaining stable energy prices, increasing energy availability, and utilizing environmentally cleaner energy sources.

Are Funder crowdfunding options open for companies registered overseas?

Funder is currently open to all companies registered as a limited liability company (LTD) in Kenya. In the case of a consortium, it is essential that the company registered in Kenya owns the strategic assets that the company uses for its activities.
If you are a resident of Kenya, you can set up a company here: https://www.ecitizen.go.ke/ecitizen-services.html

How can I start a campaign on the Funder platform?

Write to us about your start-up/company expressing your wish to apply for crowdfunding, care@funder.co.ke and we will get in touch with possibilities for co-operation and ideas how to contribute to the success of your company.

What should I do before launching the campaign?

Funder recommends that entrepreneurs considering equity crowdfunding carefully weigh the purpose and role of raising funds, and what can be accomplished with these funds. You should also write business plans and cash flow forecasts.
It's also crucial to examine the makeup of your team and, if you lack particular skills (for example, marketing personnel), find a solution to the problem before launching a campaign or, alternatively, give a solution to the problem after the campaign has ended.
Before launching an event, it is important to prepare a marketing and communication plan so that you can draw attention to your event from the beginning. Equity crowdfunding can be regarded as an open marketing campaign to build your company's image and attract a wider audience through your products or services. Carefully review all your marketing activities, appoint responsible team members, set deadlines, and start implementing the plan. A comprehensive action plan and its continuous implementation are an important prerequisite for attracting investors and finding new customers and partners. In other words, it is essential to the success of your company.
Ensure that the company seeking cash through crowdfunding owns all trademarks, domains, designs, databases, client lists, presentations, prototypes, and so on. If you're unsure, confirm the situation and record the assets in your company's accounts.
Funder recommends that you carefully analyze your offerings to investors, as the majority of them desire to profit from their money. As a result, describe the advantages to the investor in terms of time and money, as well as when and how much they will profit. Make your description concise and realistic. Consider what else, aside than earnings, may entice an investor to invest in your company.
For example, benefits and commitments may include profit sharing and the option to withdraw from investment, page 15. When a certain bill is reached, promise to repurchase stocks and pay dividends on a specific bill, including plans for additional investments, mergers, or purchase options. You can also agree in the shareholder agreement to repurchase shares with an agreed margin on a specified date. The more specific your commitment, the more attractive the event will be to investors.
In addition there are some requirements for launching a campaign:

1. Your business must be an Kenyan private limited corporation (LTD).
2. The shareholders' right to subscribe, the shareholders' right to vote electronically, and the par and premium value for share capital increases should all be included in the company's statutes. We also urge that pawn restrictions be included in the statutes.
3. The entire share capital of the corporation has been deposited.
4. The company's shares are registered with the Kenyan Central Register of Securities.
5. You have opened an escrow account in Funder for the duration of the campaign, in accordance with the account agreement's unique provisions (Funder provides necessary bank contacts).
6. You've made the necessary decision to seek out investors and raise the company's share capital.
7. The campaign site has all of the necessary information and materials.

What is the percentage of shares You recommend to offer, for investors?

That decision is entirely up to the entrepreneur. We also propose that you speak with your legal counsel about the situation. When it comes to crowdfunding, the percentage normally ranges from 5 to 20%.

How can I calculate the value of my company?

The value of your firm is primarily determined by you, although we encourage that you research various appraisal methodologies and talk with other businesses and specialists. The economic situation, market potential, working team, competition, fixed assets, contract security and terms, and other elements all influence the worth of a company.
Your potential investors are highly interested in your company's worth, and this is a key factor to consider when making an investment decision. As a result, make sure to provide an explanation of how to calculate your company's value in your campaign introduction (e.g. Investor Promises and/or Business Plan).

Why must the share capital be deposited?

The company that launches the campaign must deposit its share capital in order for it to be enlarged and new shares to be issued to new investors.

How to engage as many investors as possible?

You should keep the minimum investment amount as low as feasible to reach as many equity crowdfunding participants as possible. Because the lowest investment, in the case of OÜ, can be the market value of a complete share, the minimal investment, even with the fixed valuation, may still be too high.
If the company has extra assets on its equity account (reserve, profit, premium par), the bonus issue can be used to raise the share capital. As a result of the rise in share capital, the minimum investment amount can be reduced, making the investment more appealing to potential investors.

Why do I need to increase the share capital of my company and not alternatively sell the shares?

Investors in equity crowdfunding want to put money into your firm rather than buy your stock.

Why should pre-emption rights be fixed in the statutes?

Pre-emption rights allow shareholders to control the acquisition of shares by third parties.

Why it is necessary to fix the e-voting in the statutes?

Because some investors may come from other places where the company is located, voting at a shareholders' meeting may be difficult for them, we urge that a more convenient method be established for them.

Why should the premium par value be fixed in the statutes?

Because the increase in share capital is not carried out in nominal value, the statutes must establish a premium par value. The amount paid by the investor in excess of the share's nominal value is known as premium par value.

Why should shares be registered in Central Register of Securities (CDSC)

Funder advises that the shares be registered in the CDSC so that all investor transactions and procedures are simple and exit expenses are low. In addition, CDSC makes procedures and shareholder lists more transparent and accessible. You may learn more about registering shares at CDSC HERE; you'll need all shareholders' securities accounts. After registration of shares the company has certain obligations to CDSC, find out more here.

Why does my company need a special account at Funder?

During an equity crowdfunding campaign, all funds are transferred into a separate account for your company. This is unique in that no one can access these funds until the campaign has completed, thereby safeguarding the investments until the investors receive their shares. If the campaign fails, Funder has the right to return the funds to the investors, or to your firm if the campaign succeeds.

Is it possible to alter/change videos or other campaign elements during the campaign period?

Given that they are the aspects of the entire campaign, and that the investors' judgments are based on them, it is not possible to change portions of the campaign/campaign elements throughout the campaign period.

How to manage a great number of shareholders?

Individual and corporate investors who invest during the stock crowdfunding event will become shareholders of your company, as long as you do not exclude them from the investor list after the event.
You can control the number of investors by setting the minimum investment amount for each investor, so that you can keep the number of potential investors low or high. Here you must keep in mind that the higher the minimum investment for each investor, the more difficult it is to achieve your activity goals.
According to the company law, all shareholders must be treated equally under equal circumstances, but in fact all this depends on their right to participate and respond (you can make a decision or veto them individually). In most cases, if a quorum is reached, 1/2 of the shareholders’ vote is required at meetings to approve the decision.
Certain decisions (such as changes to the articles of association) require a higher number of votes, mainly two-thirds of the votes of all shareholders attending the meeting. Minority shareholders have the right to the board of directors who have been informed of the company's activities and have the right to inspect company documents. At the same time, the company can refuse to provide certain information or submit documents in case there are reasons to believe that this will seriously harm the company's interests.
Minority shareholders who hold at least 1/10 of the share capital may need to conduct special audits of the company's financial status and management. The required auditors can be appointed based on the decision of the shareholders. If minority shareholders hold at least 1/10 of the share capital, they have the right to request special control procedures and appoint controlling entities/individuals based on shareholders' decisions. Considering the large number of shareholders, the requirements and procedures derived from ’s corporate legislation, how to convene shareholders’ meetings, make decisions, and formulate meeting minutes are certainly worthy of attention. Law firms and NSE can definitely help you here.
We also recommend that you maintain open and transparent communication. Let your investors update regularly (on a quarterly basis). At the beginning of your relationship with investors, tell them how, when and how investors will receive information about the company’s development (for example, through Newsletters), closed social media groups or some other web-based solutions).
The general meeting of shareholders must be convened at least once a year to confirm the annual report. This regularity may not be sufficient. Therefore, we recommend that you conduct a short survey immediately after the event to understand how often and through which channels your investors would like to receive information on the selected topic. Try to find suitable solutions for all investors, of course within your ability.

Why is a shareholder agreement needed and what points should it involve?

It is best to be clear from the beginning what your common future will look like. Therefore, we recommend signing shareholder agreements with all potential shareholders during the campaign. Considering the number of shareholders, agreeing to terms and signing transactions may be more complicated because different investors have different backgrounds, experiences and expectations.
The shareholder agreement might control additional rights and responsibilities not covered by the law. You can set financial duties, commercial activity, alienation, board responsibility, competence, and other restrictions in such agreement.
We present an example of a shareholder agreement that may be customized to meet your company's needs.

What to consider about the existing investors?

In case you have a history of engaging investments and you have investors in your shareholder list as well as shareholder agreements, clarify how the shareholder agreement regulates inviting new investments. There might be some requirements, pre-conditions or limitations to that or earlier investors might have some special rights or clauses protecting their investment (e.g. antidilution protection), also there could be veto clauses on involving new investments (prior consent needed or a shareholder right to veto the decision on the share capital increase).
We recommend to discuss the equity crowdfunding issue with your existing investors or at least inform them about it. In addition we recommend that you check your shareholder agreement clauses if the agreement can be made public during the campaign or if it can be shared with potential investors. In case this is forbidden or the existing investors do not agree to that you should draft a new agreement for new investors or conclude a confidentiality agreement with potential investors who wish to learn more about agreement terms.
In case the earlier investors have an anti­dilution protection, you should carefully consider, prior to launching the campaign, how to protect their rights and what you need to do for that.

How to protect trade secrets during the crowdfunding campaign and after that?

During and after your campaign, we propose revealing your trade secrets as much as feasible and as much as necessary. Try to demonstrate your competitive advantage as clearly as possible without revealing any of your trade's most sensitive facts (use generalization, measuring indicators, statistics, financial indicators etc.). In case you need to reveal your trade secrets to your investors, conclude a relevant confidentiality agreement to minimize the risks.

How long should the campaign last?

In general, Funder offers a 30-45-day campaign duration. It's worth noting that this time frame excludes the preliminary project feedback, which is a free service available to all campaign owners.

Is it possible to prolong the campaign?

As a rule, we do not forsee such an option, but in rare cases this is possible. The company can launch several crowdfunding campaigns during 12 months, according to company’s needs, provided that the total amount of crowdfunded investments remains below KES 10 million.

What happens when the minimum investment amount is/is not reached?

If the goal is not met, the cash will be refunded to the investors. If the minimal investment has been met, it is recommended that you wait until the end of the campaign to ramp up your promotion efforts in order to reach the maximum amount. If you don't achieve the maximum, your organization will receive the minimum or the whole amount that exceeds the minimum.

Is it possible to raise more funding that the maximum limit set with the campaign?

There is no way to go over the maximum limit. As a result, we urge that you carefully analyze your requirements, as the maximum investment limit cannot be changed during the campaign.

How much does it cost to start a campaign at Funder platform?

Please see our price list for pricing and service fees.