East Africa-focused investment platform LelapaFund has pivoted its business model, moving away from equity crowdfunding towards a new closed syndication-style platform, LelapaFLOW, enabling funds and angels to co-invest.
Launched in 2015, LelapaFund originally operated an equity crowdfunding platform open to anyone wishing to invest directly in African startups; and enabled investors to contribute their skills as well as finances to their chosen ventures.
The organisation based its model on the belief that crowdfunding can address the lack of access to finance hindering early-stage startups in Africa – particularly in the sub-US$1 million range -, while also creating a less-risky inroad for foreign investors looking to invest on the continent.
Two years down the line, LelapaFund has announced a shift in model away from its initial retail product, and is currently piloting a new closed platform, known as LelapaFLOW.
LelapaFLOW is based on a syndication-style platform offering member institutional funds and experienced angel investors – rather than the public – the opportunity to co-invest.
“We made a decision to put more weight on pre-transaction investment readiness, which required more experienced investors to participate,” explains says LelapaFund co-founder, Elizabeth Howard.
The new platform places increased importance on the sourcing of high-potential startups with LelapaFund conducting significant due diligence in advance; rather than pushing large volumes of lightly-vetted deals.
“The flexibility of LelapaFLOW allows development finance institutions and investors, be they impact or finance-oriented, to share the burden of rigorous due diligence while ensuring blended returns outcomes aligned with their respective mandates,” Howard says.
However, the aim is to also ensure the new tool is of value to entrepreneurs, and in this way to create a pipeline of well-prepared investment opportunities for investor members.
“The vision for LelapaFLOW is to build it into a two-sided due diligence tool, where entrepreneurs have free access to educational materials on investment-readiness that are directly relevant in content and timing to their fundraising. On the other side, venture partners will use its dealflow management functionalities.”
LelapaFLOW is not open to the public, but as it is currently in pilot stage interested funds and investors are asked to contact LelapaFund to discuss how the platform can create valuable channels to access investment opportunities.
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