Ayodeji Ayenuwa
Crowdyvest, a Nigerian crowdfunding platform, has proposed a debt-to-equity conversion to tackle its substantial financial challenge. The company is facing a ₦7.7 billion debt owed to 3,700 crowdfunding investors since 2021.
As CEO Temitope Omotolani explains, they are actively seeking solutions, stating, “We are concurrently exploring opportunities for our members to get quarterly payouts as we recover funds from project partners that are owing us.”
To address this financial challenge, Crowdyvest anticipates recovering around ₦2 billion from businesses it previously funded within the next two years. These funds will be managed by a registered asset manager and disbursed to investors.
However, the bulk of the debt, approximately ₦5.7 billion, is designated to be converted into equity within Crowdyvest Management Limited, granting investors collective ownership of 35% in the company.
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As Omotolani asserts, “We have come to the realization that our commitment to meeting our obligations to all stakeholders can only be legitimately fulfilled if we remain a viable and continually improving entity.”
The roots of Crowdyvest’s financial challenges trace back to its involvement in the agritech sector and its previous association with the EMFATO group, which included companies like Farmcrowdy and Treepz.
When Crowdyvest left the EMFATO group in 2021, it took on the debt of Farmcrowdy, a crowdfunding platform that encountered difficulties in repayments, partly due to the impact of the COVID-19 pandemic.
Despite the hurdles, Crowdyvest is steadfast in its commitment to stakeholders and is unveiling the ‘Phoenix Fund,’ a new investment vehicle to secure essential funds.
This approach is similar to the one employed by the cryptocurrency startup Patricia, which also faced a comparable challenge. Crowdyvest’s journey emphasizes the adaptability required in today’s financial landscape as they navigate the complex balance of financial recovery and innovation.
Techrectory with Agency Report.
