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Why the UK’s newest crowdfunding firm is aiming investors at emerging markets

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Crowdcube is a dominant force in the UK’s crowdfunding market, capturing headlines for its diverse work with the government, milkshake makers, record breaker JustPark and an F1 business.

Looking to enter the UK’s crowded space is Emerging Crowd, a company that claims to be “the first platform where ordinary investors can invest directly in equity and debt fundraising campaigns by unlisted growth-stage companies in select frontier and emerging markets.”

The idea is that looking to the fast-growing developing worlds will provide the opportunity for investors to receive higher returns on their campaign contributions.

It comes following Facebook founder Mark Zuckerberg’s renewed push of his Internet.org scheme – the joint venture with partners including Samsung, Qualcomm, Nokia, and more, which looks to deliver connectivity to the world.

During his 15 April speech, the social network boss said we should all consider “how many brilliant entrepreneurs there are, who have great ideas and the will to change the world. They just lack basic tools to do so. If you go by the population, almost two-thirds of these entrepreneurs don’t have internet access today.”

The comments will surely sit well with Emerging Crowd’s founders Lucien Moolenaar and Will Tindall, who can only expect entrepreneurial activity in developing markets to grow as the internet does

The pair highlighted the funding gap that SMEs suffer from, and with so much noise around Silicon Valley, Tech City and other highly publicised startup hubs, it’s easy to see why other markets can slip between the cracks.

Describing its tech as “state of the art’, Emerging Crowd’s pioneering partners to use the platform as a source of alternative finance are media streaming channel Bozza and coffee chain Neo.

Of course, both businesses are in hot markets.

You only need to look at the user base of Spotify – 60m users and 15m paying subscribers – and YouTube which has more than one billion users.

Meanwhile, the Q1 2015 results from Netflix tell a similar story. The company topped 60m users over the period, though two-thirds are in its native US, which highlights significant room for growth in video streaming overseas.

The letter to shareholders even said: “Starting in Q2 we intend to shift some of our US marketing budget to international to take advantage of the substantial available growth opportunities.”

So for Bozza, which supports downloading and streaming of music and video content from African artisits across mobiles and tablets, things look promising. Its initial funding target is set at £500,000 and would be used to scale across the continent, before eventually rolling out globally.

Emma Kaye, founder and CEO, said: “About 60 per cent of Africa’s population is under 25, and they’re eager media consumers willing to pay for quality online content.”

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As for the coffee business, Pret A Manger reported on 21 April it’s selling over 1m cups a week, which has been achieved with an organic approach for customers.

Elsewhere, a report has forecast the UK will have over 20,500 coffee shops and an £8.7bn turnover by 2018, while coffee giant Starbucks adopts localisation to ensure its global branches resonate with the markets it sits in.

Nigeria-based Neo was founded in Lagos three years ago by former banker brothers Ngozi and Chijioke Dozie, who boast their business is witnessing fast growth with the largest number of shops of any chain in West Africa.

According to CEO Ngozi: “Nigeria’s consumers are only just discovering coffee shop culture — the growth potential is huge. To put this in context, South Africa, with a GDP of $350bn and a population of 50 million, has over 200 outlets owned by branded coffee chains.

“Nigeria has a GDP of $520bn, three times the population and a middle class that has grown by 600 per cent over the past 15 years, and yet Neo, with just a handful of locations, is already the largest branded chain of coffee shops in Nigeria.

“Well executed coffee shop chains are a proven business model that has been hugely successful in the world’s richer countries, and the trend is now taking off among the millions of aspirational middle-class Nigerians.”

Neo is also hoping to raise £500,000 of equity investment through Emerging Crowd which would allow the business to continue its growth throughout the country.

The two pioneering Emerging Crowd users were both screened ahead of admittance on the channel – a process that will continue for other interested parties to safeguard investors. The due diligence is carried out by the company’s team of investment analysts

Tindall, said: “Our aim is to build an online community of investors who are passionate about the exceptional growth opportunities available in frontier and emerging markets. Until now the vast majority of investors have had no way to reach these types of companies, let alone consider buying a stake in them.”

The company assures that the investment documents involved are governed by English law, despite the support of overseas businesses.

Moolenaar added: “We combine best practices from private equity, capital markets and crowdfunding, including extensive background checks, thorough due diligence and unparalleled disclosure on every deal. We also require companies to provide quarterly and annual updates, allowing our members to monitor their investments and see the impact they are having in these rapidly growing markets.”

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