Crowdfunding, a popular financing method by which funds are solicited for a project or venture from a large group of individuals, usually via the internet, could soon become a reality for Bahamian entrepreneurs and small businesses.
With access to capital being among the biggest, if not the biggest challenges for many small and medium enterprises, crowdfunding could be seen a go-to alternative financing option to assist local enterprises meet their funding needs. GoFundMe and Kickstarter are some of the well-known crowdfunding platforms.
The Securities Commission of The Bahamas (SCB) which regulates and govern the securities and capital markets in the country has proposed Securities Industry Business Capital Rules, 2017 which will allow for crowdfunding. The draft rules can be viewed here.
While addressing a recent half-day seminar on the crowdfunding rules Christina Rolle, the SCB’s executive director said: “It is our intent that these Rules will provide a feasible avenue for start-ups and help small businesses to access capital via the general public and provide other ancillary benefits such as fuel innovation and growth within the Bahamian economy by opening additional investment opportunities for all Bahamians. Of course, the Commission is concerned with the protection of investors and ensuring that the market is fair and equitable with respect to all securities dealings. Consequently, the rules will maintain appropriate mechanisms to protect investors such as disclosure requirements for the small businesses and investment limits for certain categories of investors.”
The rules for the first time have defined, in the Bahamian context, what a small and medium enterprise is. Christian Adderley, deputy manager of policy and compliance at the SCB noted: “For the purpose of these rules and after initial consultation with market participants, The Commission has determined that a small enterprise will be defined as an enterprise that employs fewer than 20 employees with a net income not exceeding $1.5 million. It must meet both thresholds. For a medium enterprise, the Commission has determined that a medium enterprise represents a company that employs between 20 and 49 employees with a net income not exceeding $3 million.”