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.
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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
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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
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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:
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• 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:
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SMEs
SMEs
How Securite changes SME’s and entrepreneurs’ financeBefore Current with Securite
IssueMany SMEs & entrepreneurs cannot accessfinance• Geographical limitation
- Relying on local financial institutions,not enough chances to be financed
• Limited approaches to be financed- Banks do not provide loans without collateral- Individuals have limited chances to
support with their money
SolutionEmpathy based financial inclusion• Finance across the nation
- Individuals can invest to SMEs & entrepreneurs that they want to support anytime anywhere, through our online platform “Securite”
• Gather investment from individuals with empathy for SMEs’ & entrepreneurs’ business
Individual investors withempathy across the nation
SMEsSecurite
$Banks
VC
$Banks
VC
Local
City
Entrepreneurs
Entrepreneurs
Entrepreneurs
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Alliance with institutions to establish ecosystem
Partners• Financial institutions (73)• Local governments (30)• Others (73 accounting firm &
tax accountant office, etc.)
SMEs&
Entrepreneurs(especially womenand young people)
Music Securities Introduction of MS
Introduction ofSMEs & entrepreneurs
Fees
Fund-raising from individual investors
Understand needs of financing
Promote growth of economy & Solve social issues
Support SMEs & entrepreneurs by Securite
Partnership agreement
Introduction fee
• This model is an important factor to expand our business, thus, we will develop the same model in PELUto solve social problems by providing financial access to women and young people and SMEs in the region
• 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
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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
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Our initiatives in Peru
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Our initiatives in Peru
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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
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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
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- 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?
Result of the Questionnaire Survey
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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?
Result of the Questionnaire Survey
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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?
Result of the Questionnaire Survey
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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.
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Kenji Igei's first full album is coming soon!
• We produce a Nikkei Peruvian artist Kenji Igei’sfirst full album in collaboration with Abaco.
• In the future, Music Securities Peru’s first fund may be his music fund.
“We are Nikkei” and “Uchinanchu Yaibin” are pre-released
from TODAY!!!
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Kenji Igei's first full album is coming soon!