Digital Capital Raising - Nigeria

The total transaction value Nigeria's Digital Capital Raising market market is projected to reach US$101.40m in 2024.
MarketMarketplace Lending (Consumer) dominates the market with a projected total transaction value of US$95.27m in 2024.
From a global comparison perspective, it is shown that the highest cumulated transaction value is reached the United States (US$36bn in 2024).
In Nigeria, the increasing adoption of digital platforms for capital raising is revolutionizing the traditional methods of fundraising in the capital market.

Definition:

The Digital Caiptal Raising segment relates to digital financial services for business customers, and private borrowers. Included are Crowdinvesting models, which focus particularly on start-ups exchanging investment for company shares (equity-based), and Crowdfunding solutions, which are used for non-monetary compensation, for example product launches, music, art & film financing (reward-based). The market also includes bank-independent loan allocation for SMEs (Crowdlending) and for personal loans (Marketplace Lending or so-called Peer-to-Peer lending) through private or institutional investors via online platforms. In view of processing complexity, this market is focused on small and medium-sized enterprises (SMEs), freelancers and private persons. Bank financing is not considered, neither are any financial aspects that reach beyond the scope of small and medium-sized enterprises or donation-based Crowdfunding models.

Structure:

Digital Capital Raising consists of Reward-Based Crowdfunding, Crowdinvesting, Crowdlending and Marketplace Lending.

Additional Information:

The market comprises of transaction values, campaigns, average funding per campaign.

Alternative financing for SMEs and freelancers
Equity-based Crowdfunding (or Crowdinvesting)
Reward-based Crowdfunding (or Crowdfunding)
Alternative lending for SMEs and freelancers (bank-independent loans)
Online marketplaces for personal loan applications and private investors
Peer-to-Peer loans with interest rates depending on internal credit scoring of the platform provider

Traditional bank loans
Traditional venture capital investments by institutional or private investors

The Digital Capital Raising market in Nigeria has been experiencing significant growth in recent years, driven by a number of factors.

Customer preferences: Nigerian investors are increasingly turning to digital platforms for capital raising due to the convenience and accessibility they offer. With the rise of internet and smartphone penetration in the country, more people have access to online platforms that allow them to invest in various financial products. Additionally, the younger population in Nigeria, which makes up a significant portion of the country's workforce, is more tech-savvy and comfortable with using digital platforms for financial transactions.

Trends in the market: One of the key trends in the Digital Capital Raising market in Nigeria is the emergence of crowdfunding platforms. These platforms allow individuals and businesses to raise funds from a large number of people, often through small contributions. This has democratized the capital raising process, making it more accessible to a wider range of individuals and businesses. Crowdfunding has gained popularity in Nigeria as it provides an alternative to traditional financing options, which can be difficult to obtain for small and medium-sized enterprises (SMEs) and startups. Another trend in the market is the increasing use of blockchain technology for capital raising. Blockchain technology allows for the creation of decentralized and transparent digital ledgers, which can be used to record and verify transactions. This technology has the potential to revolutionize the capital raising process by eliminating intermediaries and reducing costs. In Nigeria, blockchain-based capital raising platforms have emerged, offering investors and businesses a more efficient and secure way to raise funds.

Local special circumstances: Nigeria has a large population of unbanked individuals, who do not have access to traditional financial services. This presents a unique opportunity for digital capital raising platforms to tap into this underserved market. By providing alternative financing options, these platforms can help bridge the gap and provide financial inclusion to a large segment of the population. Furthermore, Nigeria has a vibrant entrepreneurial ecosystem, with a growing number of startups and SMEs. These businesses often face challenges in accessing capital from traditional sources, such as banks. Digital capital raising platforms offer these businesses an alternative avenue for funding, enabling them to grow and contribute to the country's economic development.

Underlying macroeconomic factors: The Nigerian economy has been experiencing steady growth in recent years, driven by sectors such as telecommunications, agriculture, and services. This growth has created a favorable environment for capital raising, as investors are more willing to allocate funds to promising projects and businesses. Additionally, the government has implemented policies to promote entrepreneurship and innovation, which has further fueled the growth of the digital capital raising market. In conclusion, the Digital Capital Raising market in Nigeria is developing rapidly due to customer preferences for convenience and accessibility, trends such as crowdfunding and blockchain technology, local special circumstances such as a large unbanked population and a vibrant entrepreneurial ecosystem, and underlying macroeconomic factors such as steady economic growth and government support for entrepreneurship. This growth presents opportunities for both investors and businesses in Nigeria, as they can leverage digital platforms to raise and invest capital more efficiently and effectively.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.