What is crowdinvesting and how are companies selected?
Crowdinvesting is the process whereby investors, big and small, buy shares online in private companies. Crowdinvesting is also known as equity-based crowdfunding, online investing or investments crowdfunding.
Companies are sourced, vetted and diligenced by LelapaFund. No company may create a campaign on the platform without going through our selection process (see Selection Process below).
LelapaFund selects early-revenue African companies, or those based outside of Africa whose market is African, in the FMCG (fast-moving consumer goods) and tech space.
Who is eligible to invest?
All prospective investors must create a free account and complete LelapaFund's online Accreditation in order to become eligible to invest.
What returns can I expect?
All companies on LelapaFund are for-profit and have been selected for their high growth potential. Financial returns expectations will vary between companies according to their chosen definition of returns, and business model. For example, companies targeting high social or environmental returns might have lower financial returns expectations.
Do I need a degree in finance to invest?
No. Every investor brings a unique skill set and understanding of a business or product that goes beyond financial analysis. Sharing skill sets with other investors allows for a complete view of an investment opportunity. All investors must understand the risks involved, and are aligned through their common goal of realising financial returns.
What about fraud?
LelapaFund has a strict vetting process that lasts 4-12 months per company, resulting in a final selection rate of less than 2%. Our direct relationship with each entrepreneur, local presence, trusted peer network and technical assistance partners enrich this due diligence process to minimise the possibility and incentive for fraud in our selected companies. Prospective investors can and should perform their own due diligence, including meeting the management team in person if feasible, during the campaign.
What are my rights and responsibilities as a shareholder?
Shareholder rights are set out in the Shareholders Agreement for each campaign. In compliance with French regulations, all companies guarantee minority shareholder rights in the form of voting (1 share = 1 vote), obligatory annual general meetings (AGMs), obligatory annual audited accounts and regular updates from the management team.
You will be invited to participate in AGMs during which you can exercise your vote, or delegate it to another shareholder. You will receive ad-hoc requests for advice and guidance on issues falling under your expertise. However, each shareholder decides their level of personal commitment to their investee.
How do I realise a financial return?
Shareholders in growth-stage private companies typically realise financial returns when they are able to sell their shares at a higher price ("exit"). Exit opportunities include a public listing on the stock exchange, a share purchase by a larger fund, a share buyback by the management team or a sale of the company to a larger corporate. Private companies may also distribute dividends to its shareholders over the course of the investment. LelapaFund has an exit-centric selection criteria and the entrepreneur must identify desired and realistic exit opportunities during the due diligence process.
How long is the investment period?
Companies on LelapaFund seek to generate financial return after 5-8 years.
Does LelapaFund manage my investment?
What currency are investments made in?
All investments on LelapaFund are made in Euros (EUR). However, since the issuers are mostly based in African countries, the funds are converted to the relevant African currency. This means that investors assume the exchange rate risk associated with their investment.
Private Sophisticated Investors
How do angel investors and networks use LelapaFund?
Angel investors may join the community as private sophisticated investors to benefit from early access to our company pipeline. Please contact us to join our Lead Investor Circle.
Angel networks may use LelapaFund to invest funds on behalf of their members. Networks which have a legal entity set up to do this may follow the Accreditation process for "Institutional Investors". Networks without a legal entity may invite their members to accreditate as "Private Sophisticated Investors".
Can an angel investor lead an investment?
Yes. Active angel investors can be ideal lead investors and often bring their own pipeline to LelapaFund's team. Angel investors seeking to lead investments may join LelapaFund's Lead Investor Circle. Please contact us for more information.
How do Venture Capital funds use LelapaFund?
Venture Capital funds seeking to grow their African portfolio may use LelapaFund as an intermediary for high quality deal-flow, transaction and legal support while minimizing their overheads.
VC portfolio companies seeking to raise capital from the crowd for specific reasons, such as product validation and regional visibility, may use LelapaFund to crowdinvest a maximum tranche of EUR1mn. Please contact us for more information.
How can Private Equity firms benefit from LelapaFund?
LelapaFund aims to structure its deals in a way that maximises the company's attractivity for exits to private equity funds as they seek investable deals to enter the African markets. Private equity funds that are exploring the region with a view to increasing their exposure in the FMCG and Tech sectors are invited to contact LelapaFund.
Accelerators & Incubators
How do Accelerators use LelapaFund?
Accelerators often have companies which require a larger capital raise than can be provided by the funding arm of the accelerator. Accelerators may use LelapaFund to co-invest deals which fall within our mandate and meet our due diligence requirements, or simply assist such companies in preparing for an equity crowdfunding round. Please contact us for more information.
How can Incubators prepare companies for crowdinvestment?
Incubators seeking to maximise their incubatees' ability to raise equity capital may integrate parts of our selection process into their in-house services. Our highly popular entrepreneur workshops cover the full spectrum of corporate governance, valuation and investor relations. Please contact us for more information.
How can Impact Investors use LelapaFund?
LelapaFund's community of impact investors includes early-stage funds and mature organisations responsible for managing funds at the world's largest foundations. We understand the specificities of impact mandates and invite investors to join our Lead Investor Circle to incorporate their impact metrics prior to the transaction. Please contact us for more information.
Does LelapaFund have a Social or Environmental Impact focus?
Yes. LelapaFund's selected companies operate in labour-intensive sectors such as agri-processing and textiles, or renewable energies such as solar power, or consumer technologies. All of these generate a positive social or environmental impact in the community, and many benefit women and girls in particular.
However, all of LelapaFund's selected companies seek profitability, sustainability and scalability above any pre-defined non-financial impact.
Development Finance Institutions
How can DFIs use LelapaFund?
DFIs equipped with grant, debt or equity finance mandates might seek to solidify the governance and capital structure of their portfolio companies by putting them through our process with a view to raising an amount that matches the DFI's financial commitment. Risk-sharing in this way also allows the DFI to tap into smaller companies that fit their mandate but where the deal size is uneconomical.
What is LelapaFund's fee structure?
Creating an investor account on LelapaFund is free, and no fees are charged to the investor for making an investment.
When a campaign is successfully funded, LelapaFund charges a success fee to the issuer. This is 8% of the amount invested.
Does LelapaFund charge management fees?
No. No management fees are charged by LelapaFund after the transaction.
Does LelapaFund take a cut on capital gains?
No. LelapaFund does take a cut of the capital gains realised by its shareholders. Investors accrue 100% of pre-tax capital gains.
What other fees will investors be charged?
Your bank might charge you bank fees during the funds transfer.
Company Selection Process
What prior due diligence has been done on companies?
LelapaFund has a classic due diligence process adapted to the size and maturity of the companies seeking equity capital.
After an initial two-step screen, selected companies are invited to enter the due diligence phase. A series of assessments and analyses - Legal, Commercial, Customer, Supplier, Market Analysis, Financial Analysis, Exit strategy - are then conducted over several months. This is followed by a site visit. LelapaFund meets with the management team several times and tests product consistency over the due diligence period.
LelapaFund seeks out opinions and advice from sector experts as needed. Experienced investors in our Lead Investor Circle are regularly solicited to contribute views on companies and valuations.
How are company valuations conducted?
To ensure ease of comparability between investment campaigns, LelapaFund conducts its own valuation for each company using a consistent methodology (a weighted combination of discounted cashflows, industry, company and team-specific factors).
Is there a technical assistance component?
Most, but not all, of companies on LelapaFund will have a technical assistance partner. LelapaFund's structured value creation process includes a technical assistance diagnostic by a partner intervening during due diligence and continuing after the campaign, provided the campaign is successful. We select world-class industry specialists to add value on targeted areas identified as most likely to drive shareholder value creation.