Dutch banking firm Rabobank and Nxchange have joined forces to launch Rabo&Crowd, a new alternative funding platform for small and medium-sized enterprises (SMEs).
Rabo&Crowd offers businesses access to a new financing channel that combines a bank loan provided by the Dutch banking company with funding from private investors.
On the other hand, Nxchange, through its platform, gives SMEs the opportunity to attract funding by issuing tradeable bonds. The Nxchange stock exchange serves as a platform for investors to buy and sell the bonds issued by the SMEs.
Rabobank Corporate strategy & innovation head Marcel Gerritsen said: “Rabobank will always provide a portion of the funding by means of a bank loan or credit facility. Rabo&Crowd is the result of experiences acquired with Rabo&Co, a platform through which high-net-worth individuals could invest substantial amounts in businesses together with Rabobank.
“Rabo&Crowd fits perfectly with our roots as a cooperative bank– it is all about matching investors with entrepreneurs looking for funding.”
Rabobank said that Rabo&Crowd, which is at the pilot stage, will be refined and improved further following the input of initial adopters and investors.
According to the Dutch multinational bank, investors can join the Rabo&Crowd community with a minimum amount of €100, which they can invest in businesses by buying bonds on the Nxchange stock exchange.
Depending on market demand, the bonds can be traded on the Nxchange stock exchange prior to their expiration date, which makes it attractive for SMEs and also for investors, said Rabobank.
Businesses have the opportunity to issue short-term as well as long-term bond loans, while investors have the option to sell bonds before the expiration date.
The minimum application amount for businesses seeking crowdfunding through Rabo&Crowd is €200,000. Upon filing of the application, the businesses are assigned a Rabo&Crowd coach who will handle the application process.
After the approval of the application, the coach also helps in putting up an online campaign to attract investors via the Nxchange stock exchange.
Rabobank claims that the market exposure created by this process also enables businesses to get the attention of ambassadors and potential new customers.