Why equity crowdfunding matters and why the current model will fail without redesign

Dr. Samuel Kenneth Adolphus Bernard CRABBE

In Article 1, we explored how global equity crowdfunding evolved into a multibillion-pound industry, raising more than £3.3 billion in the UK between 2014 and 2019, with global projections exceeding £10 billion by 2030. The discussion also highlighted Ghana’s unique challenge: enormous entrepreneurial energy restrained by chronic financing gaps. This second article builds on that foundation by explaining why equity crowdfunding (ECF) should matter for Ghana’s growth, and why the traditional model—if adopted blindly—will struggle to survive in our environment.

Why equity crowdfunding should matter to Ghana’s economy

Ghana’s economic engine runs on micro and small enterprises, yet formal financing remains out of reach for most of them. Banks prioritise collateral, private equity rarely engages early-stage entrepreneurs, and angel networks remain thin and informal. This creates a structural bottleneck where innovation exists, but capital does not.

Equity crowdfunding offers an alternative pathway. In mature markets, it has democratised investment, enabling ordinary citizens, professionals, and diaspora communities to invest small amounts in promising ventures. This approach has expanded the pool of investors, fostered entrepreneurial discipline, and infused transparency into startup ecosystems that previously operated informally.

For Ghana, equity crowdfunding could provide the missing bridge between ambition and capital—allowing great ideas to be funded without the traditional gatekeeping of collateral-based finance. Yet this opportunity can only materialize if the underlying system is robust enough to sustain investor trust.

Why the traditional ECF model will not work in Ghana

Globally, equity crowdfunding evolved on a revenue structure that rewarded platforms only during the fundraising stage. Platforms earn fees when a campaign succeeds, not when a business performs well afterward. This created what I describe as the Campaign-First Business Model—a design that optimises the fundraising experience but neglects the investment lifecycle that follows.

During campaigns, everything works impressively: polished pitches, strong marketing funnels, diligent communication, and platform-driven momentum. But once the funding window closes, the system weakens quickly. Communication between entrepreneurs and investors becomes sporadic, reporting becomes optional, and governance frameworks that look convincing on paper often prove too weak to enforce when problems arise. Globally, investors frequently find themselves holding equity in companies that provide little information, offer no exit opportunities, and leave regulators without the tools to intervene effectively.

These are serious issues even in highly regulated, digitally mature markets. In Ghana, the consequences are more severe. Our business ecosystem is characterised by informality, inconsistent bookkeeping, variable corporate governance culture, and limited enforcement of shareholder rights. A system that already struggles in London or Berlin will not survive in Accra, Kumasi, or Hohoe without significant re-engineering. If Ghana were to adopt the global model as-is, the outcome would be predictable: investor enthusiasm followed by rapid disillusionment, loss of trust, and a short-lived industry.

What a Ghana-ready ECF system should look like

To make equity crowdfunding viable in Ghana, we must abandon the campaign-first orientation and adopt a Lifecycle-Based ECF Model—one that treats raising the funds as only the beginning rather than the end. Such a model must institutionalise three forms of discipline: transparency, governance, and enforceability.

A Ghana-ready system requires transparency that is not left to the goodwill of entrepreneurs. Reporting should be automated and structured, with digital tools ensuring that investors receive timely updates, milestone progress, and financial information. When communication is system-enforced rather than personality-dependent, investor trust becomes sustainable.

Governance must also be strengthened. Traditional shareholder agreements are often too theoretical for Ghana’s environment, where dispute resolution is slow, expensive, or avoided altogether. A reformed ECF model should integrate digital governance tools, milestone-based oversight, and clearly enforceable commitments that reduce ambiguity. Investors must have confidence that the rights they purchase are rights they can exercise.

Finally, liquidity must not be treated as a luxury. One of the most persistent complaints from investors worldwide is that they are locked into their investments for years with no exit opportunities. Ghana cannot replicate this flaw. A functional ECF ecosystem must provide structured redemption windows, regulated secondary trading mechanisms, or tokenised equity rails that enable controlled liquidity without destabilising the market. Without credible exit channels, the entire industry will plateau quickly.

Regulation will also need to evolve. Ghana’s regulators should not attempt to manually police thousands of micro-investments. Instead, the regulatory model should be digitally enabled, with standardized filings, real-time audit trails, and embedded compliance mechanisms that provide visibility without requiring constant intervention. Regulation must be built into the system’s architecture, not layered on top of it.

Why all of this matters for Ghana’s future

If these reforms are embraced, equity crowdfunding could become one of Ghana’s most powerful economic catalysts. It would democratise investment, mobilise diaspora capital, formalise SME governance, and expand the nation’s capital markets into areas previously unreachable. More importantly, it would create a financing culture where performance, communication, and accountability are not exceptions but expectations.

But Ghana cannot afford to replicate global mistakes. We must build an ECF system tailored to our environment—one that recognises our institutional realities, leverages our digital potential, and prioritises trust across the full investment lifecycle. Only then can equity crowdfunding fulfil its promise as a transformative engine for national development.

Next in the Series

Article 3 will examine how blockchain, smart contracts, and tokenised equity can address the systemic failures in traditional equity crowdfunding and create a more transparent, trustworthy, and liquid investment ecosystem for Ghana.

>>>the writer is a PhD graduate in Business and Management from the University of Bradford, specialising in blockchains and decentralized finance. He also holds an MBA in International Marketing from the International University of Monaco. Dr. Crabbe was the first president of the Ghana Business Outsourcing Association and pioneered Africa’s first large-scale data-entry operation as well as Ghana’s first medical transcription company. He can be reached via [email protected]

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