Business

Investors wary about crowdfunding

Crowdfunding is stil a new financing method in Botswana
 
Crowdfunding is stil a new financing method in Botswana

Launched last month, the crowdfunding initiative is expected to raise up to P5.38 million from armchair investors to build 17 units for affordable housing, 13 for sale and four for rentals on a 3,685 square metre (sqm) plot.

Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large pool of people. It makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together.

However, Vantage Properties chief executive officer, Sethebe Manake who spearheaded the crowdfunding initiative for Rerotlhe, said so far the participation on investors is unsatisfactory.

She attributed the slow uptake to what she said is the conservative market that the country has particularly with issues related to real estate and the complexity of the investment type. 

“We find that potential local investors are worried because of prior experiences being cheated out of their mon. So it is fair that they would be cautious now,” she said.

Manake assured the potential investors that crowdfunding is a very ‘secure investment model and that we are compliant with all regulations’.

She said the other thing that they have noted as they proceeded with the roadshow in Europe was interestingly that the private investors there did not know enough about Botswana.

“So we have to educate Batswana here about the investment vehicle, then we have to educate the global investors about Botswana, it’s all quite an interesting journey,” she said.

Manake also indicated that there was also a misunderstanding in the global markets about the currency, that the 12% return is quoted in pula terms and most investors had either calculated it in euros or dollars, which would make it a highly ambitious return.

However, she said this has been cleared with those investors who were interested.

“We do have to exercise a lot of patience as this is a new thing for our market. South Africa did really well when we got in because it is a more ‘sophisticated’ market in terms of understanding various investment vehicle,” Manake said.

She added that they would be launching a second South Africa project soon that will be funded through the crowdfunding.

Manake explained that crowdfunding is an investment model that has achieved the desired results of funding real estate projects before and that it continues to do so in other countries.

She expressed confidence that it will win in Botswana too, noting that as people get more and more comfortable they will be able to invest with greater ease.

If they are not able to raise funding for the current Botswana project, Manake said it would mean that the project was not found attractive by investors on the platform.

She further enthused that other projects will continue to be available, and that the platform continues to offer the investment opportunity to investors, and a funding option to developers.

“We are educating the local market through various mediums. We are presenting to different groups of investors and investment clubs who want to understand more about the platform and the project,” Manake said.

At an international level, she said, there are continued roadshows for the platform and for the various projects that are currently live on the platform and those that are on the pipeline that other developers have brought in for possible funding.