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Proposal: Angel Fund, An Investment Opportunity (Tanzania).

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by kotinkarwak, Aug 20, 2010.

  1. k

    kotinkarwak JF-Expert Member

    Aug 20, 2010
    Joined: Aug 5, 2010
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    In financing terms, fund to grow a business can be had from loans with a financial institution or from personal investment as well as from family and friends contribution. The family and friends type funding is referred to as angel fund. For this discussion, I hope for expansion of this family and friends source to encompass a wider group of people who have come together to form an organisation and deposit funds that is targeted to finance a given business or a set of businesses. For the member contributors, they would from a strict funding description either expect a return of their initial contribution, an interest earned on the contribution or donate their contribution or the earnings to a predefined charitable cause.

    Sorry for the red herring at this point about an investment opportunity since this does not exist in any shape at the moment, so be wary if someone starts calling you on investing today... Read on to understand the said idea.

    This discussions premise is the existence of a foundation/organisation of member driven finance vehicle to cater for the funding of small and medium scale entrepreneurs in viable businesses within Tanzania or the EAC block.

    The preamble suggests formation of a fund as a direct investment or angel fund to be organised and managed by the members with all the legal requirements for such an organisation having being setup to manage the fund.

    Discussion member number: Discussion point
    Discussion member contributions: Discussion point,

    Setting the scene, I would like to draw your attention to the current driver in the economy: wajasiria-mali: coined to refer to entrepreneurs of all shape and size. Given the various forms of these enterprises, I will for this discussion refer to small and medium enterprises who will require corporation registrations with the relevant governing bodies.
    the range of entrepreneurship in the region will assume a vibrant crop of ideas floating in the market that is seeking inception and/or growth funding. Aside from confirming viability for a business, arrangements would be made to either fully finance such a venture by taking up ownership of the said business, as a percentage or for a direct financing proposal where interests is earned from such capital injection.

    I understand issues that resulted in the pyramid schemes that plagued the region in 2009 and presumably before then, but that episode highlighted the need for sound investment vehicles being required to meet the needs of a high volume of mid tier investors whose options are somewhat limited in the current share markets in the country.
    In the above statement, I assume the stock market limitations to assimilate a high volume of fund injection; it only buying funds on issued shares.

    The entrepreneur
    As an entrepreneur, a signed up member of the fund, I would have access (following business viability approval) to the fund to grow my business either as a direct financial injection (loan) or in partnership with the angel fund itself. This financing would hence have been worked out by professional managers of the fund to allow fo the business to thrive for the benefit of my corporation as well the Angel Fund.

    Fund Members
    Earn a return on the operations of the fund in the loans, business the fund acquires on behalf of the members

    The fund management will propose all requested fund requests to all members for approval. The possible business sectors that the fund can invest in to be agreed by contributing members. Discussion points I volunteer include education, healthcare and agriculture projects.

    Fund management
    Relevant management structures to be setup with all the checks as required. Annual meetings, Auditors etc.

    Opening up this topic for discussion, seeking experts in the finance, legal and all relevant arenas to educate us on how such a setup can be implemented. Is it even possible?. For you the reader, if this sounds something that you can participate in, what is your take on the numbers mentioned, the idea and what would in your opinion allow such an organisation to function if at all?

    My personal take is that small entrepreneurs currently lack the funds to initiate and grow their business and may be lacking the traditional securities that are required by the traditional finance houses. For many family and friends sources would only stretch so far, and if the investment required is sizeable, then the venture will in most part never take off the ground. In light of this another opening is required that can augment the finance needs while due to its own checks and balances would secure that investment through part ownership of the venture hence the benefit borne from that arrangement would allow for the investment to take place, something that is not available from the traditional banking sector.

    natanguliza shukrani kwa maoni yenu ya hii topic.


    Elimu | Tanzania
  2. T

    Tunsume Member

    Jun 30, 2015
    Joined: Aug 25, 2008
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    Any progress on this?