Contxto – Once upon a time, only the elite could invest in stocks and companies. It used to be almost esoteric for everyday folks.
Now, with the entrance of technology enhancing security such as blockchain and new financing schemes such as crowdfunding, the public is increasingly able to take advantage of these opportunities.
Not only can companies searching for funding explore alternatives, but people with extra cash can become private investors. Now reaching a consolidation point, Snowball is a Mexican startup facilitating the fundraising process for SMEs and startups.
Voting comes first
Snowball’s model is quite interesting since companies can’t start a crowdfunding campaign without first going through a voting phase. To prove potential traction and prospective campaign success, users vote on whether or not the company should join the platform.
Meanwhile, users can acquire shares of startups and SMEs by either sending wire transfers, depositing funds or even making crypto payments. Whether you’d like to invest in a high-growth potentially risky startup or a small consolidated SME, both are possible.
For instance, the well-known Mexican coffee shop chain, La Borra del Cafe, is currently fundraising through Snowball. Not only that but the platform organizes investment pools, sort of replicating stock market ETFs but for private companies.
Right now, the startup is working on transferring its platform to a private blockchain system through the Ethereum smart contract network. This will presumably bring more tools, efficiency, as well as safety, over the platform. Mexico’s recently implemented fintech policy will most likely contribute to the process.
“Consolidation occurs from various points of view,” said Gustavo Martínez Gameros, CEO of Snowball. “First of all, I believe that being recognized by the Mexican financial authorities as a player where Mexicans can invest and save their money already proves our strong foundations. We predict a greater consolidation in the coming years.”
Perfected concept
According to the founder, his company has succeeded in synthesizing the concept by prioritizing both investors and companies. To help both parties raise money, Snowball provides fair and standardized valuations.
Being capable of obtaining shares regardless of your social status results in more trust among investors. Additionally, Snowball is exposing the benefits of crowdfunding campaigns, which is exactly what it represents.
“We are carrying out important actions, particularly in the area of crowdfunding where we have managed to generate a very robust model that raises capital for different companies and startups,” said Martínez.
Crowdfunding is a capitalization model for companies where an investment offer is put in the interest of the general public so that everyone can participate.
According to the National Report of Financial Inclusion in 2017, 8,000 companies secured funding through crowdfunding platforms. Compared to 2015, that is a 280 percent increase.
Consolidation also grew following Mexico implementing its Fintech Law. As the first of its kind in Latin America, it granted more certainty to investors betting in the financial technology space, particularly subindustries such as payments and crowdfunding.
-VC
