the possibility of crowdfunding for start-ups in peru · 2019-11-08 · the possibility of...

The possibility of crowdfunding for Start-ups in Peru

Foro Economico Peru - Japon y XIII Reunion Bilateral de CEPEJA Innovacion: "Actualidad y futuro de las startups en Latinoamerica“

日本ペルー経済フォーラム第13回日本ペルー経済協議会日系ファンドから⾒たラ⽶Start-up企業の現状と可能性

Music Securities, Inc.

About myself:

- In 2000 founded Music Securities.

- “Securite” attracted investments from fans

- In 2006 it started offering funds for small companies.

- In 2009 the first Japanese Microfinance Fund was launched.

- In 2011 “Disaster Area Support Fund" was launched.

- Young Global Leader selected by World Economic Forum (Davos).

Appeared on the Cover of Forbes Japan’s issue on “New ways of using your money”, along with our client entrepreneur, Mr.Maruyama from Maruyama Coffee Co. Inc., on the left.

©2019 MusicSecurities,inc all right reserved. 2

2000 • Start of business and the first music fund

2007 • Junmai Sake Fund for Shinkame Shuzo (introduced by DBJ)

2008 • Registered with the Financial Services Agency of Japan as “Financial Instruments Business Operator “

2009

• Launched Impact Investment Platform “Securite” - Integrated several services/categories such as music and

sake into one web-based platform to manage account and customer information in the one system. It extended businessopportunities for a wide range of industries and customers

2011

• Launched Disaster Area Support Funds- Utilizing the experience and function of “Securite”,

introduced an unique financial scheme based on half-donation and half-investment to support business owners in the disaster area of the Great East Japan Earthquake

2016 • Launched Kumamoto Earthquake Disaster Area Support Fundswith local governments and a national university

2000

2018 • Launched Social Impact Bond in Japan with local governments2018

- We run one of the world’s first crowdfunding platforms. Our focus is on impact investment and we raise funds based of “empathy”.

History of Music Securities


8.9 million USDTotal offeringamount

580Number of business owners

865Number of funds raised

461Redeemed funds

• 10,000~2 millions USD(Ave. 120,000 USD)

• 100~500 USD investment per an individual

Size of fund-raisingper a fund

• Material procurement• Promotion• Equipment etc.

Purpose of funds

100JPY = １USD

Track record: “Securite” at a glance


Fund raising based on

business planGather

investorsRealize

business planRevitalize

local business

PR Investment Return based onperformance

Individual investorsbased on empathy

Companyrunning businessrelated to SDGs

Return (monetary / non-monetary)

Investment

Securite

How Securite works:


• Not capital-safe &no personal guarantee or lien- Raise fund from individual and

corporate investors with empathy, in accordance with a business plan

• No acquisition of shares- Investment without acquiring

shares, and ownership of companyis not transferred

• Planning return flexibly- The timing of return can be set

depending on business plan(Approximately 1~10 years)

- Return based on business performance

Risk money to support challenge

￥￥￥￥

￥￥￥￥

Funds we want to provide:

• Mr. Maruyama started coffee shop in Nagano in 1991.• He found that coffee growers have “cash flow” problem due to fluctuating coffee

price and limited access to finance• For Mr. Maruyama to engage in direct-trading, our scheme was suitable,

allowing him to pay to coffee growers before he gets cash arising from sale of the coffee purchased

• Good impact on coffee growers in Latin America in terms of cash flow• This is a good sign for families of the coffee growers and the local economy

• 11 funds• USD 2 million raised• 104.8% return

(※ Average of 11 funds)

Example: Maruyama Coffee Funds


Our initiatives in Peru

Partnership with IDB Lab and Abaco• Co-financed Abaco credit union’s credit

expansion for rural producers with IDB Lab by Securite fund.

• We replaced 2 funds for Abaco in 2014 and 2019.

Conducted JICA’s feasibility survey for micro investment crowdfunding to support local micro, small and medium businesses in Peru

• Interviewed with key industry participants including start-ups, social ventures, farmers, fintech companies, universities, regulatory authorities, and so on.

• Conducted questionnaire survey for potential investors. (Details are on the next slides)

Abaco and we have built relationship since 2013

A part of our funding supports rainbow trout producers in the lake Titicaca area


In Peru, only 6.7% of SMEs have formal financial access.

1.74

M

Large Company

Small & Medium

Company

6.7% has access to formal

financial institutions

Company

99.5%

Premise of the Survey: The issue on financial access


No

6% I don’t know

11%

Depend on the

project content

49%

Yes

34%

Know a lot

16%

Know little

35%Know little but

don't know how

it works

22%

Never heard

27%

- Among the respondents, 73% of them have heard “Crowdfunding”.

- Responding to weather you want to participate in investment-type crowdfunding, 49% of them

respond “depend on the project content” and 34% said “Yes”.

Do you know “Crowdfunding”? Do you want to participate

in investment-type

crowdfunding?

Result of the Questionnaire Survey


- The most popular investment type crowdfunding products is “Social Investment Type”,

29%. The next is “High-risk High-return Type”, 26%, then “Low-risk Low-return Type”,

24%. *Social Investment type is to support SMEs in rural area with low financial return.

Social

Investment Type

29%

High-risk High-

return Type

26%

Low-risk Low-

return Type

24%

Angel Investor

Type

8%

Others

5%

N/A

8%

What kind of investment

type crowdfunding products

are you interested?



Project owner's

profile and

personality

11%

Products of

projects

10%

Vision and

mission of project

9%

Feasibility of

project

18%

Past record of

project

2%

Originality or

Innovation of

project

11%

Project Area

4%

Content of return

4%

Benefit to me or

not

10%

Friends are

involved in

project

3%

Social

contribution of

project

6%

Media exposure

2%

Credibility of

crowdfunding

provider

9%

others

1%- Among the respondents,

they care about “Feasibility

of project” the most, in

case of participating

crowdfunding.

- “Project owner’s profile and

personality” and

“Originality or Innovation of

project” - 11%

- “Products of projects” and

“Benefit to me or not” –

10%

When you participate in

crowdfunding, what factor

do you care about?



13

13

15

16

18

26

36

36

38

38

45

51

57

61

83

0 20 40 60 80 100

Winery or other alcoholic…

Public infrastructure such as…

Livestock

Fishery Industry

Others

Textile enterprise

Microfinance institution

Hospitals and schools

Processed food Enterprise

Farmer

Business with foreign country

Natural energy enterprise

IT related enterprise

Hotel and Tourism related…

Business using new technology

What kind of business or project are you interested?

9

1

3

0

10

31

1

8

1

9

4

1

0

12

11

4

3

0

2

2

0 5 10 15 20 25 30 35

0-100

101-200

201-300

301-400

401-500

501-1,000

1,001-1,500

1,501-2,000

2,001-2,500

2,501-3,000

3,001-3,500

3,501-4,000

4,001-4,500

4,501-5,000

5,001-10,000

10,001-20,000

20,001-30,000

30,001-40,000

40,001-50,000

50,001-

Unit:soles

How much money do you want to invest in

crowdfunding?



Conclusion

Peruvian middle class has been increasing and they have a strong interest in investing in various kind of businesses, which includes not only high yields project but also social investment type project.

It is anticipated that crowdfunding regulation will be introduced in Peru. The regulation aims to enhance investors protection and therefore, once it is enforced it is expected to open and expand a new crowdfunding market in Peru.

Therefore, there is a great potential for SMEs, including Start-ups to raise capital by means of investment type crowdfunding.

In spring 2019, we created a new Lima-based company “Music Securities Peru, S.A.C” to prepare for launching a crowdfunding platform in Peru. We will start investment type crowdfunding operation once the regulations are in place.


Kenji Igei's first full

album is coming soon!

• We produce a Nikkei Peruvian artist Kenji Igei’s first full album in collaboration with Abaco.

• In the future, Music Securities Peru’s first fund may be his music fund.

the possibility of crowdfunding for start-ups in peru · 2019-11-08 · the possibility of...

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