The most cited challenge by startups and early-stage businesses is access to financing from traditional sources – banks, VCs, etc, simply because they are still too risky and too small for them. In other markets, crowdfunding is increasingly becoming a popular alternative way of raising funds by new ventures. Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture (Investopedia).
As part of its initiative to catalyze a better regulatory environment for startups through the FUNGUO Programme, UNDP Tanzania has supported the Tanzanian Capital Markets and Securities Authorities (CMSA), in drafting the first Crowdfunding Guidelines in order to enable startups and early-stage businesses to raise capital through alternative means. Crowdfunding needs to be regulated to protect investors from fraudulent schemes, and there was no such guide or regulation previously, making these the first-ever guidelines in crowdfunding in Tanzania.