Publication: Crowdfunding in Emerging Markets: Lessons from East African Startups
Loading...
Published
2015
ISSN
Date
2016-03-02
Author(s)
Editor(s)
Abstract
The purpose of this paper is to capture lessons learned from East African entrepreneurs who were some of crowdfunding’s first adopters. Their experiences can serve as a practical guide for entrepreneurs looking to more effectively utilize crowdfunding across all emerging markets. In order to gather this data, the World Bank conducted interviews with a number of East African technology entrepreneurs who ran crowdfunding campaigns, both successfully and unsuccessfully. The following paper offers six key lessons for entrepreneurs in Africa and other emerging markets as they consider when, why and how to launch a crowdfunding campaign: crowdfunding is much more difficult than most entrepreneurs anticipate and is not for everyone. Opportunity costs abound; business needs should dictate platform choice; payment systems impact platform choice; quality and quantity of contributor networks are key; entrepreneurs should tap into complementary resources and organizations to increase their likelihood of success; and crowdfunding can have non-monetary benefits.
Link to Data Set
Citation
“World Bank Group. 2015. Crowdfunding in Emerging Markets: Lessons from East African Startups. © World Bank. http://hdl.handle.net/10986/23820 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Enabling International Market Linkages : Lessons and Insights(Washington, DC, 2014)Growth-oriented entrepreneurs, especially those in small countries and those that are highly innovative, often look to international markets to grow their business. From a development perspective, entrepreneurs successful expansion into international markets can mean revenue growth and job creation at the enterprise level, along with spillover effects into innovation, industry competitiveness, and foreign exchange on a broader economic level. However, entrepreneurs do not always have the necessary know-how and networks to expand beyond their national market, nor do they have effective resources they can draw upon to gain access to the required knowledge and contacts. InfoDev focuses on enabling the growth of early-stage enterprises across the developing world. During 2010 - 2013, infoDev piloted a few approaches to enable international market access for small, relatively early-stage, growth-oriented enterprises. In total, about 200 enterprises from more than 35 countries participated in these pilots. The results and lessons from these pilot projects summarized in this document provide insights for practitioners who are considering increasing international market access for early stage entrepreneurs. Recommendations as to further research in this field are also provided.Publication Reaching Entrepreneurs through Alternate Models : Lessons from Virtual Incubation Pilots(Washington, DC, 2014)Entrepreneurship is an essential component of a growing and dynamic economy. It is a key driver of competition, innovation, and net job creation. The founders of these enterprises can innately gravitate toward cities or hubs that provide them with the resources needed to start or grow their businesses. A 2013 report by Endeavor on what attracts entrepreneurs to cities (What Do the Best Entrepreneurs Want in a City?) noted that entrepreneurs are able to find relevant talent, resources, access to customers and suppliers, and often incentives such as lower taxes and business-friendly regulations in metropolises. infoDev focuses on enabling the start-up and growth of innovative enterprises. infoDev designed a small pilot project to test the merits and values of virtual incubation, recognizing that many innovative entrepreneurs in emerging and developing markets may be situated in less urban areas and that often even the more developed cities lack access to basic resources, such as access to Internet, electricity, or other services and talent. Virtual incubation aims to bring the range of services and tools provided by traditional business incubation to the entrepreneur, in contrast to the entrepreneur availing those services and tools at a fixed location. In addition, understanding that an entrepreneur may have varying needs, virtual incubation provides a more diverse range of these services and tools. This includes outreach services, drop-in services and facilities, online tools, consultancy, mentoring, and networking. The pilot project focused on Vietnam and aimed to assess the cost-effectiveness, sustainability, and impact of services and tools provided to entrepreneurs through this intervention. The pilot comprised a number of activities, including the development of a new generation of entrepreneurs in the country, the establishment of angel networks, the dissemination of best practices, and the expansion of entrepreneurial networks and communities across major hubs in Vietnam.Publication Transforming East African ICT Sector by Creating a Business Engine for SMEs(World Bank, Washington, DC, 2011)For the purposes of this project, the East African countries included in the study were Kenya, Rwanda, Tanzania, and Uganda. The focus for this project was Small and Medium-sized Enterprises (SMEs) as for-profit or nonprofit organizations with less than 50 employees and not exceeding USD 1,000,000 in annual revenues/turnover. The main output of this project was a proposed program of interventions to drive transformational change. To succeed in this ambitious endeavor, the project articulated clear objectives and designed a blueprint for implementation including levels of resourcing, budget and monitoring metrics. Over the course of the project the team conducted brief surveys with over 90 entrepreneurs, over 50 percent of who had 3-10 years of experience in the Information and Communication Technology (ICT) sector and primarily worked at companies with 5 employees or less.Publication Enhancing Access to Finance for Technology Entrepreneurs : Analysis of Highly Innovative, High Growth Start-Ups in Vietnam, Cambodia, and Nepal(Washington, DC, 2014)The first part of the study provides contextual background to the financing gaps and associated barriers, which restrict access to finance for HI start-ups. These barriers are driven by both supply and demand sides of the financing equation. Supply side barriers include: high transaction costs associated with financing; high levels of credit risk associated with HI start-ups; high collateral required by financial institutions; non-conducive legal and regulatory environments for investment in HI start-ups; lack of start-up expertise and dedicated resources by financiers; and finance products that are not tailored to HI start-ups needs and circumstances. Demand side barriers include: reliance by HI start-ups on informal financing sources; lack of awareness on the process to apply for funding from formal financing sources; low levels of financial literacy by HI start-ups; and the fear of losing control by involving external investors. This section also contains a broad overview of the country frameworks governing the start-up sector, together with some of the initiatives relating to access to finance. The second part of the study covers the fieldwork undertaken in Vietnam, Cambodia, and Nepal. The fieldwork gathered views from investee firms (irrespective of whether they were successful in raising finance or not), investors, and other stakeholders. The fieldwork was aimed at understanding the severity of the financing gap for HI start-ups, the stage(s) of financing impacted by lack of access to finance, and the sources of financing for HI start-ups. Lastly, financing catalyst recommendations address non-financing impediments, which if overcome will have a positive impact on access to finance.Publication Do Digital Technologies Facilitate Illicit Financial Flows?(World Bank, Washington, DC, 2016-01)The emerging concept of illicit financial flows has become a crosscutting issue on the international agenda in recent years. This umbrella term refers to money illegally earned, transferred, or used. With the development of digital technologies, the use of information and communications networks as a tool for facilitating illicit financial flows is rising as one of the key challenges in tackling the problem of the movement of illegal funds. Digital technologies facilitate illicit financial flows at each stage, be it earning money illegally, transferring illegal funds, or using them. There are several areas where clear links between technology and illicit financial flows can be established. Part one defines illicit financial flows to establish the scope of the problem and provide the context for further analysis. Part two focuses on the issue of digital technologies in the process of earning money illegally and transferring illicit funds, and analyzes how technology can help in the process of acquisition, transfers, and integration of illicit finds. Part three discusses the role of technology in fighting illicit financial flows. Part four concludes with suggestions for further areas of research in this field and ways to tackle the problem more effectively.
Users also downloaded
Showing related downloaded files
Publication The Role of Liquefied Petroleum Gas in Reducing Energy Poverty(World Bank, Washington, DC, 2011-12)Increasing household use of liquefied petroleum gas (LPG) is one of several pathways to meet the goal of universal access to clean cooking and heating solutions by 2030, as stated in the United Nations' Sustainable Energy for All Initiative. This study examined factors affecting household use of LPG, the state of LPG markets in developing countries, and measures to enable more households to shift away from solid fuels to LPG. The study is based on three separate but complementary analyses of factors affecting LPG use in developing countries: (1) econometric analysis of national household expenditure surveys in 10 developing countries that assessed the factors influencing LPG selection and consumption; (2) examination of LPG markets in 20 developing countries, including their regulatory frameworks, pricing and other policies, supply infrastructure, cylinder management, amount of information available to the public, and activities designed to promote household use of LPG; and (3) data from households in 110 developing countries about energy choices related to cooking, with information on energy choice by wealth quintile available in 63 of them.Publication Human Resources for Mental Health Service Delivery in Viet Nam(Washington, DC: World Bank, 2024-05-30)"Human Resources for Mental Health Service Delivery in Viet Nam" provides an overview of the country’s current state of and challenges to mental health service delivery. The framework of the report is composed of four interconnected domains: health care, social services, education and mental health literacy, and informal care systems. The organizational structure, significant achievements, critical gaps, and problems in mental health service delivery at the institutional and community levels are highlighted in terms of public demand, availability, accessibility, and quality of service. The report uses new empirical data from surveys, workshops, and group discussions with key stakeholders. It describes the mental health workforce in Viet Nam and analyzes critical issues, including the shortage of professionals (psychiatrists, mental health nurses, psychologists, psychotherapists, social workers, occupational therapists, and others). Given the need to develop all levels of mental health care, the report addresses the uneven distribution of the provision of service between levels of health care institutions and rural and urban regions, competency mismatches, job satisfaction, recruitment, and challenges to the retention of mental health workers. The report also examines the need for mental health education and training at the institutional and structured program levels, as well as the supply constraints to the future development of the mental health workforce. The interdisciplinary team of authors emphasizes the urgent need for Viet Nam to strengthen its human resources for mental health service delivery toward achieving universal health coverage, including all mental disorders. The report’s evidence-based recommendations include multisectoral workforce planning; transformation of education and training; coordination, integration, and retention of the available workforce; improvement of the workforce governance framework; and strengthened mental health financing.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Economy Profile of Bhutan(World Bank, Washington, DC, 2017-11-01)Doing Business 2018 is the 15th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it. This economy profile presents the Doing Business indicators for Bhutan. Doing Business presents quantitative indicators on business regulation and the protection of property rights that can be compared across 190 economies; for 2018 Bhutan ranks 75. Doing Business measures aspects of regulation affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation, which is not included in this year’s ranking. Data in Doing Business 2018 are current as of June 1, 2017. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why.Publication Indonesia Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-23)Indonesia’s economy remains resilient amid worsening global conditions. GDP grew at 4.9 percent year-on-year (yoy) in Q1-2025, slightly lower than previous post-pandemic quarters. Domestic demand was impacted by reduced government consumption and lower investment. Budget efficiency measures led to a contraction in public consumption, while investment in the construction and manufacturing sectors dipped due to investors’ concerns over domestic and global policy uncertainty. Meanwhile, declining commodity prices worsened Indonesia’s terms of trade. The supply side showed notable contributions from the agriculture and services sectors. Businesses and households are adjusting to economic uncertainty, but weak consumption of middle-class households has been persistent since the pandemic. The GOI structural reform agenda could accelerate growth further. In response to rising global policy uncertainty, the GOI devised a program of deregulation including reforms to the business environment and licensing, investment liberalization, trade and logistics reforms, and digital services. These reforms complement other reforms currently in play, like those related to financial sector deepening, and accompany the demand stimulus that the GOI is targeting through its priority programs. If implemented, these reforms could gradually expand the economy’s capacity, unlock further FDI, boost investment returns, and ensure productivity gains. The report suggests that this will translate into better job creation and raise GDP growth to 5.3-5.5 percent in 2026-2027. This report identifies the necessary steps to reach the target of providing 3 million housing units each year. In short, to meet the housing target and supercharge current efforts, the government needs to act as both a housing provider and a housing facilitator: instituting housing regulation reforms, accelerating public-funded housing programs, and creating an enabling environment that attracts private investment in Indonesia. Directly, 3.8 billion dollars in annual public investments can create an estimated 2.3 million jobs and mobilize 2.8 billion dollars in private capital. Reforms can create an enabling environment for housing investments and indirectly help multiply this impact.