The past two months here at LelapaFund have flown by, and it’s great to blog from Nairobi again with the team in one place. We hope you enjoyed our first LelapaLetter. The next one will focus on an important part of our mission: bringing crowdinvesting legislation to Africa.
In the meantime, here’s a 2 minute recap on the new regulatory framework under which we’ll be kicking off.
France’s financial markets regulators, the AMF and ACPR, unveiled their official position on crowdinvesting at CrowdTuesday last month in Paris and rules came into force on 1 October. As a French-African platform, we’ve been studying the new framework and working out how it balances shareholder protection with easier access to finance for startups and small businesses. Overall, we think France has done a great job. Bravo!
In contrast with the current U.S. regulations, France does not distinguish between accredited and unaccredited investors. This means anyone can invest on a French platform, regardless of their wealth or experience. The onus of investor protection is thus shifted to the platform, which has to comply with a host of strict transparency rules covering risks, due diligence, investment offering material, and fee structure, as well as ensure that an investor’s profile corresponds to the proposed investment.
Getting the regulator’s approval is a hefty procedure for platforms which now have the choice of two new accreditations, the CIP (participative investments advisor) or PSI (investment services provider). The latter allows for more complex deal structures and requires regulatory minimum capital. Both require significant management experience in finance.
The message is clear: anyone can invest, but only on the very best platforms. Oh là là!
We couldn’t agree more.