Kiro’o Games, the Cameroonian gaming company that produced the country’s first ever locally made video game, is changing the way crowdfunding is done in Africa. After raising more than $64,000 from 1310 investors in 2015 on the US-based crowdfunding platform, Kickstarter, the company decided to bring it home by building and running its own crowdfunding campaign in Cameroon. Rebuntu, the final product of that effort, to date, has raised more than $850,000, just $150,000 off its funding target of $1 million, even though the funding campaign was started April last year.
And apart from the expected promises of giving investors (each of whom invested at least $500) voting and some management rights, Kiro’o Games’ Rebuntu also offers them the right to resell their shares in the company 3 times the purchase price by 2026 (or 10 times by 2030) alongside receiving accumulated dividends of more than $1200 (on minimum investment sum of $500). The funding model not only offers a strong insight into the alternatives to scarce venture capital in Africa, but also reveals the relative ease of fundraising available to Cameroonian startups.
Why The Rebuntu Crowdfunding Product Is So Significant
Kiro’o Games’ crowdfunding platform Rebuntu is unique in many ways.
First, it marks a new shift in the equity crowdfunding model. And unlike intermediary platforms which could be used by startups to raise funds, Rebuntu has proven that startups can themselves build and run their own crowdfunding campaigns, provided that they comply with existing laws and regulations. This will not only save them the cost of running successful campaigns on intermediary platforms, but will also reduce the time spent interfacing with intermediaries and regulators. A good case in point is raising funds through South Africa’s leading crowdfunding platform Uprise.Africa. To run a successful crowdfunding campaign on the platform, Uprise usually recommends allotting $1600 for campaigns between $189,000 to $315,000; $3200 for campaigns between $315,000 to $630,000; and $5000 for campaigns between $630,000 and above. All fees are exclusive of Value-Added Tax (VAT 15%), including 8% VAT deducted on successful capital raises as well as 2% management fee, 5% Uprise.Africa platform/capital raise fee and 1% charge on the proceeds raised to cover the running costs of Uprise Fund.
Secondly, with self-run crowdfunding platforms, there are usually no time constraints on fundraising. Rebuntu’s $1 million fundraise has been on since April, 2019, with no end in sight until the funding goal is accomplished. Although this may appear slow and daunting, going through intermediaries usually comes with challenges related to time. As an instance, even though fundraisers on Uprise.Africa can set the campaign duration to last between 30 and 90 days, full campaign, by estimates, only run approximately for 6 months, covering campaign preparation, campaign run, shares issues and payout.
Again, the Rebuntu product is highly effective in building investor-company relationship quicker. Unlike intermediaries where the fundraising companies leave a substantial part of the relationship building process to the crowdfunding platforms, self-run platforms such as Rebuntu, takes responsibility for constructing relationships with their prospective investors, an advantage that can yield more investments and returns in the future.
Therefore, even though securing investors may be difficult for less reputable companies, in the face of increasing events of fraudulent practices by investment companies, investors secured through self-run platforms tend to be closer to the company than those secured through intermediaries. Nevertheless, this may still be counterproductive as intermediary crowdfunding platforms tend to be shock absorbers in the event of challenges with public investments. This explains the recent case of Uprise.Africa’s R25m fake pledge scandal in which the R25-million consisted of five pledges made by a Gauteng woman, Nokuthula Jessica Maaga, who was understood to be under investigation by South Africa’s First National Bank (FNB) and the Financial Intelligence Centre (FIC). According to sources, the source of income for the funds was in question. In this scenario, Uprise.Africa, and not Intergreatme, the startup in which the investment was made, was on the front burner, a classic case of intermediary crowdfunding platforms absorbing investment risks on behalf of their portfolio companies.
In any case, self-run crowdfunding platforms, through proper due diligence compliance monitoring and strong legal advisory, can themselves eliminate incidences of risk exposure.
| S/N | Name of Startup | Sector | Platform Used For Crowdfunding | Country Location of Startup | Country Location of Crowdfunding Platform | Amount Raised Via Crowdfunding | Additional Remarks |
| 1 | Intergreatme | Regtech | Uprise.Africa | South Africa | South Africa | R32.6m ($1.9 million) | *R25-million of the raise returned because the money that investors pledged was suspect. |
| 2 | My-iMali | Fintech | Uprise.Africa | South Africa | South Africa | R38,000 ($2600) out of $1.6 million target | *Quickly proceeded to raise funds from Crossfin via traditional VC way, 4 months after launch of crowdfunding campaign. |
| 3 | Beerhouse | Uprise.Africa | South Africa | South Africa | R1.08m ($60k) out of R3m target | The R3 million funding for its new Tygervalley branch in Cape Town’s Northern Suburbs | |
| 4 | Sun Exchange | Blockchain/off-grid | Uprise.Africa | South Africa | South Africa | R4.2m ($252k) out of R7m target. | All R4.2m refunded |
| 5 | Lula | Ride-hailing | Uprise.Africa | South Africa | South Africa | R361k ($21.7k) out of R2.5m | *Startup has raised more than $1m before crowdfunding |
| 6 | Drifter Brewing Company (Craft Beer) | Brewery | Uprise.Africa | South Africa | South Africa | R3.25m out of R3m target met | |
| 7 | Eversend | Fintech | Seedrs | Uganda | UK | $1m out of out of $613k target |
Why It Was Easy For Kiro’o Games To Run Its Own Crowdfunding Campaign In Cameroon
Perhaps Kiro’o Games’ self-run crowdfunding in Cameroon could best be explained from the standpoint of law.
In most countries, it is mostly prohibited for private enterprises to raise funds from the public without authorisation by relevant government agencies. This explains why most companies raising funds from the general public are always public companies.
But, in Cameroon, there is no law or regulation on crowdfunding unlike what is obtainable in Morocco, Algeria and Tunisia. Currently, crowdfunding participants in the country only rely on the body language of the government which tends to support crowdfunding. In January, 2018, for instance, a cabinet council meeting chaired by Yang Philemon, issued a communiqué stating that “the Cameroonian government encourages other financing channels for SMEs, such as leasing or crowdfunding.” A national workshop organized in February 2020 also saw the Cameroonian government affirming its desire to promote crowdfunding.
In any case, the CEMAC Regulation of December 21, 2018 on payment services prohibits any person other than a credit, microfinance or approved payment institution from providing payment services within the CEMAC zone. The regulation also prohibits any person other than an approved investment service provider from dealing on the stock market as it relates with transactions in financial securities. CEMAC means Central African Economic and Monetary Community, a regional body set up to harmonize the regulation of the sectoral policies in member countries in the essential fields prescribed by the Treaty, namely, agriculture, fisheries, industry, trade, tourism, transport and telecommunications, energy and environment, research, teaching and vocational training. Cameroon is its member country.
Notwithstanding all these, it arguable that the particular part of the CEMAC regulation that touches on the public offering of shares only applies between countries and may not necessarily affect crowdfunding in each individual member country, including Cameroon.
“We cannot say that it (crowdfunding) is illegal because what is illegal must clearly be prohibited by law,” Boris Rodrigue Minlo Enguele, a Cameroon-based finance lawyer tells Afrikan Heroes. “That said, there is a sort of regulatory rigidity often noticed when considering texts governing finance in the CEMAC zone, especially as it concerns crowdfunding. The texts tend to state that crowdfunding activities in the CEMAC zone must either be done through public offering or through private placements, something which is regrettable because crowdfunding has its own processes and methods which are fundamentally different from public offering or private placements.”
“However, there is a regulation in gestation on crowdfunding in the CEMAC zone. We look forward to it,” he further says.
This non-legislation on crowdfunding perhaps explains why Cameroon has more than 4 local crowdfunding platforms. According to a recent report by the Bank of Central African States (BEAC), the activity of one of the major project financing platforms in Africa, KIVA, also shows that out of the 348,162 loans identified in September 2017, “Cameroon is the only country represented in the [central African] sub-region with 4,421 projects financed for a total of 1.1 billion FCFA, i.e., 0.74% of the total amount raised on the continent.”
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer