HOW RISKY IS A CROWDYVEST INVESTMENT?

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Crowdyvest
About a week ago, Farmcrowdy announced that we they had launched a new crowd-funding business called Crowdyvest. Crowdyvest is a morphed version of Farmcrowdy which enables customers to invest in other sectors of the economy (technology, finance and transportation) in addition to agriculture. 

Well, the first investment on crowdyvest.com (a beef processing project selling at 60,000 Naira per unit with returns of 14% for a 6 month tenure) went live last Tuesday, the 6th of August.

 Here are some things to consider before deciding to invest with them. 
Founder Onyeka Akumah

1. The founder. Crowdyvest's founder, Onyeka Akumah, seems passionate about making agriculture work effectively and efficiently in Nigeria. He's also the founder of the online forum (agricsquare) for discussions regarding agriculture. Before Farmcrowdy, he had worked with Deloitte, Jumia, British council, Konga and so on.

2. Age of business: 
New businesses are at a higher risk of failing compared to businesses that have been around for decades. However, I will favour management over the age of business when it comes to deciding the fate of a company. 

 3. You share the risk with crowdyvest

Furthermore, as an investor, you are exposed to the same risks that crowdyvest is exposed to; albeit to different degrees. These include commodity risks (what if the prices of harvested products fall), operational risks (internal management problems), business risks (faults in their long term strategy). 
There are also regulatory issues to consider. For example, it is rumoured that the Central Bank is looking to apply some regulation to moderate interests on investments on crowdfunding websites in Nigeria. 

 Let's also consider the moral hazard risk associated with being in the eye of something new. This is the "I'm too big to fail because I have been able to raise several million dollars in support funding" risk. 
Remember that start-up companies can fail despite huge funding. 

During an Interview with Business Insider by Pulse, while commenting on a previous venture that had failed  Onyeka highlighted this fact: "As soon as we raised money, I started making mistakes that I’ll never make again. You raise money and then you think you can do everything", he said. 

However, It's important to mention that the farms on crowdyvest are insured. "The insurance cover gives a guarantee on all sponsorship opportunities made available on our platform...This insurance does not extend to returns however there is a guarantee on sponsorship", a rep. from the company stated. 

 So, should you, or should you not invest with Crowdyvest? Really, the answer is all up to you. Thanks for reading. Kindly share it with friends. 

-Tobi Amokeodo




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