Private funding for development is becoming increasingly important, as organizations look to find capital to finance their programs amid a climate of high political uncertainty.
In this shifting environment, AlliedCrowds has created the Capital Finder, a solution that can be hugely beneficial in unlocking private funding for development organizations, firms, and individuals.
Over the last several months, we have been working hard to improve the data behind the Capital Finder, and we’re excited to tell you a bit more about the tool, and show you how it can be used. Continue reading →
The following is a guest post from Norin Salim of ZingoHub, a crowdfunding platform based in India. Salim writes about the startup ecosystem, and crowdfunding in India.
Every day, 3 to 4 startups are founded in India. It is of little surprise that the NASSCOM Startup Ecosystem Report 2015 talks of India as the youngest (and steadily growing) start-up nation in the world. The developing nation has over $5 billion dollar worth investments.
What’s more, India ranks third in technology driven product start-ups right after US and UK respectively.
The ecosystem for the growth of startups is 55% conducive and merely 2% negative. This response collected by the Economic Times Barometer also depicted twice the growth since 2014. This boom has generated employment for more than 85,000 people. The start-ups are spread mainly over technological hubs of Delhi and Bangalore, accounting for 28% and 24% of activity, respectively.
The startup explosion comes from several factors, like the rise of the middle class — it’s expected to grow from 50m Indians in 2007 to 583m by 2025 — and education excellence, especially in the IT sector.
Funding Startups in India
The Government of India has set out to encourage investments and provide a nurturing environment for the growth of entrepreneurs. The key to this is stable financial input for entrepreneurs to enter the market.
When it comes to approaching private lenders, most startups fail to secure credit with traditional financial institutions, and meet the narrow and stringent lending norms. Alternative lending startups such as Rubique and Capital Float have set out to revolutionize the way consumer loans are handed out.
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Access to finance isn’t the only thing holding back African entrepreneurs — often, startups don’t have access to reliable internet, affordable offices, and a stimulating environment to work in. Our Capital Finder helps entrepreneurs access the alternative financing they need, and there’s good news on the latter front. A recent GSMA report found that there are 314 active tech hubs in Africa, as of July.
This is almost twice as many as identified in a World Bank report from last September, which identified 117 hubs on the continent. In other words, in under a year, the number of hubs grew by 168%. You can track all of the ones the World Bank found on this nifty interactive map.
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Our emerging market alternative finance Capital Finder, which we launched in late June, is a powerful tool for entrepreneurs who wish to identify financing options in their countries and sectors, broken down by the type of funding they need (equity, loan, or grant).
It’s also a useful research tool for companies and individuals who are looking to examine the alternative finance landscapes of various regions or countries. These insights can be extremely powerful — a multilateral aid organization, for example, can examine the per capita number of impact investors in one country versus another and refocus its efforts. Or, it may look at what countries have the most access to VC funding, conduct further research to understand why some nations have had more success, and look to promote lessons learned in underperforming nations.
As a reminder, our definition of alternative finance includes venture capital firms, impact investors, angel investment networks, crowdfunding platforms, as well as public and semi-public organizations (like government-sponsored bodies, multilateral aid organizations, and NGOs) that provide funding for entrepreneurs. We count organizations that operate within the country, meaning that the firms can be based outside of the country in which they operate (think of, for example, a German impact investment firm working across East Africa).
In the coming weeks, we’ll be sharing some of those numbers with our readers. Today, however, we’ll be focusing just on the basics: which countries are world leaders in alternative finance? More specifically, we identify the top countries in terms of the number of alternative financing options available to entrepreneurs, and break down the numbers.
Here are the rankings (current as of Aug. 10):
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In an earlier blog we introduced readers to the AlliedCrowds Capital Finder, our tool for locating alternative finance in the developing world.
The AlliedCrowds Relevancy Score builds on the Capital Finder, making it even more powerful.
Plenty of entrepreneurs have already used the Capital Finder to locate funding across different funding sources (venture capital firms, angel investors, crowdfunding platforms, impact investors, and public/semi-public funders). Our goal is to make this experience as smooth and productive as possible.
That is why we have collected an excellent round of feedback, and have continued to innovate and find new ways to better serve entrepreneurs in the developing world.
Queue the Relevancy Score
The Relevancy Score ensures that the listings at the top of your search are only those most relevant to you, based on the kind of financing you need. In order to do this, we gathered thousands of data points to inform an algorithm that ranks the funding sources.
Think about Google’s Page Rank Algorithm. When you use Google to look up something, Google returns not only every website that is relevant to your search, but orders them based one which it believes will be most relevant to you.
This is the essence of the Relevancy Score.
How does it help entrepreneurs find capital?
We have created the Capital Finder with the purpose of increasing awareness of alternative funding models and methods for raising capital for entrepreneurs in the developing world.
With the Relevancy Score, we take this one step further by tailoring these results in a way that maximizes the effectiveness of the data that we have acquired. Therefore, entrepreneurs have found it much easier to find capital and in turn save precious time to focus on improving their product.
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