NASD demystifies benefits of crowdfunding for MSMEs

By Omobayo Azeez

NASD OTC has demystified how owners of Micro, Small and Medium Enterprises (MSMEs) can made the best out of crowdfunding to raise capital for their business operations and expansions.

It said on Friday Crowdfunding allows an investor to have a diversified portfolio by spreading investments across multiple businesses, adding that even if one business does not take off, there are other ones to fall back on.

“There are also tax benefits accruable to an Investor as profits made from investments are free of tax.”

Making reference to proposed rules for Crowdfunding released by the Security and Exchange Commission (SEC), NASD in its release that the rule makes provision for the protection of the general public when investing in these companies by establishing limits to which investors can invest in an MSME.

“We are all aware of the imminent risks that come with starting up a business especially in the Nigerian economy. The search for patient funds while validating yourself within the market can be strenuous for a start-up company.

“Raising funds via Crowdfunding, is not only better suited for an MSME, it also avails the business an opportunity to establish its worth and get market validation.

“This also assists MSMEs in determining whether their target market will like the product/service they are offering. It is an excellent learning experience for the business as you learn to position your business in an attractive manner for potential Investors,” is explained.

The OTC further described Crowdfunding as a way for a business to start marketing themselves.

“They need to make an excellent pitch/campaign to potential investors to get them to invest in their business. MSMEs also become technology driven, using social media and other ways to direct traffic to their business.”

Regarding its crowdfunding portal, NAST said the portal has been designed to facilitate a simple feedback loop, making it as easy as possible for Investors to find a business and finance it until their priz e-reward is delivered.