CROWDFUNDING

The term crowdfunding now refers to several financing models that all rely on digital platforms and social networks to mobilize resources for a project. The main models are the following :

Donation-based crowdfunding also known as crowdgiving, involves collecting contributions with no expectation of return. It is primarily used for charitable, community-based, artistic or cultural initiatives.

Reward-based crowdfunding is a donation model that operates with incentives. Project leaders commit to providing material or symbolic rewards in exchange for the amount contributed. These rewards are delivered a few weeks after the end of the campaign.

Equity crowdfunding, or crowdequity, allows investors to finance high-potential companies and, in return, acquire an equity stake.

Lending-based crowdfunding, or crowdlending, enables a project leader to borrow the necessary funding from a community of individual lenders and subsequently repay them, with or without interest, according to a contractual schedule. This model is frequently used by small and medium-sized enterprises and entrepreneurs to cover working capital needs or investment requirements.

These models distribute fundraising across a community of individuals who choose to support a project, making crowdfunding a citizen-oriented form of investment. As digital technologies evolve, these models continue to take new forms and create additional financing opportunities, notably through mobile money services and the rise of Initial Coin Offerings (ICOs) based on blockchain technologies.

Additional information is provided in the FAQ below.

For a project leader, entrepreneur or organization, launching a crowdfunding campaign requires three complementary exercises: a management exercise to assess financing needs, a marketing exercise to identify the communities to be mobilized, and a digital communication exercise to generate the visibility and traction needed for the campaign’s success.

Launching and successfully running a crowdfunding campaign therefore represents far more value than the amount of funds raised. It is a high value-added process that allows the project leader to validate their vision and provides traditional financiers with valuable insights into both the team’s capabilities and the project’s market traction. These elements are essential for strengthening the value chain of financing innovative and high-impact projects, particularly in emerging markets.

The experts at smala & co were among the first to operate in the field of crowdfunding in Africa. Their work began with the launch of the first Moroccan high-impact reward-based crowdfunding platform, followed by a range of initiatives such as the Impact Startups Studio program, the periodic publication of the Morocco Crowdfunding Barometer, and various advocacy and awareness-raising activities that contributed to the adoption of Law 15-18 on collaborative financing.

For more than ten years, smala & co has developed a comprehensive methodology for supporting project leaders across all types of initiatives and crowdfunding models. This methodology is grounded in the mobilizing power of the “crowd” and aims to foster the emergence of new economic actors capable of addressing the social and environmental challenges of their territories through innovative solutions.

In 2014, due to the absence of a legislative framework for crowdfunding in Morocco and the restrictive regulations governing donation-based fundraising, smala & co’s first crowdfunding platform was established in France, with a professional team operating in Morocco to remain close to the local ecosystem. During this period, smala & co contributed its expertise to the national working group responsible for drafting the crowdfunding bill, which brought together ecosystem stakeholders, regulators and volunteer legal experts until the final adoption of Law 15-18. Starting in 2018, Moroccan parliamentarians were supported in understanding crowdfunding by the teams of SimSim – Participation Citoyenne, in partnership with the smala & co teams. In January 2020, the House of Representatives voted in favor of the law.

Following the creation of the Moroccan Center for Innovation and Social Entrepreneurship, smala & co launched Wuluj, an online pre-sale platform designed for innovative entrepreneurs in the MENA region. Wuluj aims to function as a market access accelerator, or Go-To-Market Booster, enabling entrepreneurs who cannot yet industrialize their production to pre-sell their products and services to customers. Deliveries typically take place a few weeks after the end of the campaign, allowing entrepreneurs to test their prototypes directly with clients and validate market demand.

Continuing its culture of exploration, the team draws inspiration from traditional collaborative models and enhances them with twenty-first century digital tools. In 2018, smala & co launched CIWA, a digital solution for securing and managing tontines, known in Morocco as Dar’t. This mobile application enables groups of individuals to support each other through collaborative credit and savings mechanisms, while integrating financial education tools that strengthen users’ management skills and help reduce default risks inherent to rotating credit systems. CIWA was awarded second place at the XXX Prize in Amman, Jordan, and later received the Orange Prize for XXX in Morocco.

Since then, smala & co has continued its work supporting the development of crowdfunding. The organization contributes its expertise alongside international cooperation actors to advance the implementation of the national financial inclusion strategy, promote alternative financing opportunities for innovative project leaders, and integrate the potential of crowdfunding with other high-impact financing sources. Through these efforts, smala & co helps emerging economies pursue their sustainable development goals and address the social, ecological and climate challenges of our time.