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Taking on the challenge of due diligence and risk mitigation; one platform's approach

February 01, 2017 • By TAB team

At a time of growth and opportunity for crowd finance, it’s vital that platforms from all over the world do all that they can to promote and preserve investor confidence.

At a time of growth and opportunity for crowd finance, it’s vital that platforms from all over the world do all that they can to promote and preserve investor confidence. As Gary Robbins of Growthdeck has argued, following the recent failure of Rebus, the claims management company which raised £800,000 equity crowd finance, due diligence and risk mitigation has moved to the top of the agenda.

One platform has taken a proactive approach to tackling these concerns.

Patrick Chella, CEO and co-founder of Realty Africa, a property crowdfunding platform in sub-Saharan Africa, goes above and beyond what's expected with security and due diligence in order to ease any of their investors' concerns.

Realty Africa launched in 2015 in response to the challenge of obtaining credit for development in emerging markets. They specialise in the financing of affordable housing and green development projects in South Africa, Botswana and Zimbabwe.

Patrick and his co-founder, Erik van Eeten, take a three-pronged approach to risk mitigation and due diligence, so that trust and transparency can be fostered between investors and property developers on Realty Africa's platform.

Firstly intensive due diligence is carried out by Big-Four auditor Deloitte, secondly, a mortgage bond is taken out against the value of the land in question to provide security for investors, and finally a trust is set up to ensure investors are protected in the unlikely event that Realty Africa falls into bankruptcy.

The importance of due diligence is clear. As Chella says: “International Investors are often wary of investment projects in Sub-Saharan Africa, so we knew that if we wanted to overcome this we would have to take a. strong, proactive stance”.

Due diligence and risk mitigation engenders investor confidence, which in turns leads to growth. With this at the forefront of their thinking, Realty Africa is doing its bit to push forward property crowd finance in Africa and risk management standards worldwide. Platforms from all corners of the globe should take note and follow suit.

Does your platform have an innovative approach to risk mitigation and due diligence? Let us know on Twitter