Losing access to your social media account has to be one of the most frustrating outcomes to date, especially with all the memories backed…
SA equity crowdfunding platform Uprise.Africa has issued the following statement to Ventureburn in response to an exposé by the publication published on 8 May on the platform, its head Tabassum Qadir and a R25-million fake pledge made to SA startup Intergreatme (see this story).
Uprise.Africa is an online marketing tool that creates a platform for business owners and entrepreneurs to market-test business plans and sell equity to potential investors.
Uprise.Africa prides itself on its secure online platform adhering to all required regulations and compliance parameters during the investment process and the roles and responsibilities between the investors are strictly governed by contractual agreements.
In the financial world, the use of online platforms to raise funds is a relatively new and unchartered territory, which can result in potential financial risks for investors.
Uprise.Africa is aware of these risks and consistently updates its processes in order to effectively report and address any potential fraudulent behaviour in the network, as well as working on best practices around authentication and fraud monitoring.
The R25-million that was pledged to Intergreatme, through its own acquired potential investor, is an example of how certain parties try and exploit these inherent risks within the crowdfunding arena.
Uprise.Africa is a Financial Sector Conduct Authority (“FSCA”) license holder and has to therefore comply with the relevant laws and regulations governing this highly regulated market sector.
These laws and regulations were therefore applicable to the Intergreatme campaign, including completing its due
diligence and FICA requirements for each potential investor who proposed to invest in the offering.
Neither Uprise.Africa nor any of its officers or directors had any pre-existing relationship with the pledgor of the R25-million.
The pledgor was introduced to Uprise.Africa by Intergreatme, as a potential investor which approached Intergreatme directly. The pledgor signed the investment pledges for R25-million at Intergreatme’s offices, which effectively filled 20% of Intergreatme’s shares on offer. Only after the investment pledge was signed was it communicated to Uprise.Africa by Intergreatme.
As a result of the significant percentage of shares to be acquired through the R25-million pledge, Uprise.Africa had to reflect the campaign as closed in order to avoid any other potential investors pledging for the same equity. The pledge had to be advertised on the website to justify why the campaign had been closed.
It is common practice with equity crowdfunding that pledges are reflected on the bar and the equity is then reserved until all the official processes have been completed, all of which is constantly updated on the campaign’s website.
Uprise.Africa conducted a due diligence on the pledgor together with an extensive compliance check, which resulted in the investment being identified as suspicious and potentially fraudulent.
At no stage did Uprise.Africa receive any money from the pledgor, nor did it benefit in any way whatsoever from this pledgor.
In fact, Ms Qadir of Uprise.Africa had not even met with the pledgor as yet. Given that there are over 400+ potential investors, Ms Qadir only meets and engages with them once their investments have been approved and subscribed, which was not the case with the pledgor of the R25-million.
Due to the significant media coverage that Intergreatme’s campaign gained in such a short time, Uprise.Africa informed all of the other potential investors and pledgors who had also pledged to invest, that they were free to withdraw their pledges, in the event that these investments were on the basis of the media coverage generated around the success of the campaign.
Uprise.Africa strictly adheres to the regulated steps to be followed during crowdfunding investment campaigns, which includes: (1) a pledge being received, (2) the pledgor and the funds must clear due diligence and compliance checks, which in this case was conducted by Uprise.Africa and (3) if cleared the pledgor signs a subscription agreement and only then becomes an investor, which did not take place in the case of the R25mill pledge. This whole process can take between 60 to 90 working days, in this case the process was completed at the end of September 2019, during which time the campaign was closed to all further investments.
Uprise.Africa is strictly governed by the FSCA and Protection of Personal Information Act 2013 (“POPI”), which restricts it from disclosing any further information.
Furthermore, African Crowdfunding Association (“ACfA”), of which Uprise.Africa is a member, conducted a review of Uprise Africa’s compliance with its Charter of Good Conduct (“COGC”), following the article by Ventureburn on 8 May.
ACfA’s full statement on this review is available on its website, however the conclusion was that “In all other respects ACfA is satisfied that Uprise Africa remains compliant with our COGC”.
Read more: Uprise.Africa did not breach our code finds African Crowdfunding Association
Read more: Uprise.Africa to refund all investors in R4.2m Sun Exchange crowdfunding campaign
Read more: African Crowdfunding Association probing controversial Uprise.Africa
Read more: Questions for Uprise.Africa over alleged fake R25m Intergreatme crowdfunding pledge
Read more: The Sun Exchange raises over R4.2m against R7m target, as crowdfunding campaign closes
Featured image: Uprise.Africa CEO Uprise.Africa CEO Tabassum Qadir (CityNews INTL via Twitter)