Types of crowdfunding
Equity, debt, and convertible crowdfunding, how each instrument works on Ardent CrowdFund, how the money flows, and which profile suits you.
Types of crowdfunding
The word "crowdfunding" is used loosely for everything from rewards campaigns on Kickstarter to donation drives on GoFundMe. On Ardent CrowdFund, the word has a strictly narrower meaning: investment-based crowdfunding regulated by SEC Ghana under the Crowdfunding Guidelines 2024. The platform supports three instruments, equity, debt, and convertibles: and this page explains how each one works, the cash-flow chain behind it, and who it's best suited to.
Equity crowdfunding
You subscribe for shares in the issuing company. You become a shareholder on the cap table, with the legal rights that class of share carries (voting, dividends, information, pre-emption). Returns come from two places: periodic dividends if the board declares them, and capital appreciation realised when you exit (a trade sale, an IPO, a share buy-back, or a secondary-market trade).
How the money moves, equity
What it's best for
Equity fits investors with a long-term, high-risk / high-upside mindset: you're betting on the company's growth, you may receive nothing until exit, and if the business fails you may lose your entire commitment. It is a poor fit for anyone who needs predictable cash flow from the investment.
Debt crowdfunding
You lend cedis to the issuer at a fixed coupon for a fixed term. The coupon is paid on a schedule (monthly / quarterly / annually) and the principal is repaid at maturity on a schedule specified in the offer document. You are not a shareholder, you are a creditor, which means a different (and generally lower) risk profile than equity.
How the money moves, debt
What it's best for
Debt fits investors who want predictable income over a defined horizon and are prepared to accept a fixed upside (the coupon rate) in return for a lower-risk position. You rank ahead of equity in any insolvency, and secured debt ranks ahead of unsecured debt.
Convertible instruments
A convertible is a debt instrument that turns into equity on a defined trigger, typically the next priced funding round, an IPO, or a maturity date if neither of those has happened. Until the conversion, it behaves like debt and accrues interest. After the conversion, you hold shares at a pre-agreed discount to the round price, capped at a pre-agreed valuation. Convertibles are common for very early-stage issuers who aren't ready to price equity but want to take in capital today.
How the money moves, convertible
What it's best for
Convertibles suit investors who want early-stage upside without having to agree a valuation on day one. The trade-off is complexity: you need to understand the discount, the valuation cap, and the conversion mechanics, see the offer document for every specific deal.
Side-by-side: equity vs. debt
For most first-time investors, the real choice is between the two mature instruments. Convertibles are a hybrid; pick the column below that matches the phase they're in.
| Criterion | Equity | Debt |
|---|---|---|
| Return typeWhat generates your return | Variable: dividends (if any) + capital appreciation on exit. | Fixed: coupon interest + return of principal at maturity. |
| Investor rights | Voting, dividend, information, and pre-emption rights tied to the share class. | Contractual rights in the loan agreement: timely payment, security enforcement, default remedies. |
| Dilution risk | Yes, subsequent raises can dilute your ownership unless you exercise pre-emption. | No, your face value is fixed; new capital raised does not affect your claim. |
| Liquidity | Low, exit depends on a priced event or the (limited) secondary market. | Higher, periodic payments and a known maturity date provide scheduled liquidity. |
| Typical term | 3–7 years (highly exit-dependent). | 6–60 months with defined maturity. |
| Risk level | Higher, last in line if the business fails; no contractual return. | Lower, ranks ahead of equity in insolvency; secured debt ranks ahead of unsecured debt. |
| Upside ceiling | Uncapped; you share in multi-bagger outcomes. | Capped at the coupon, no upside beyond contracted interest. |
| Best for | Patient investors comfortable with illiquidity and wide outcome ranges. | Income-oriented investors who value predictability and capital preservation. |
Where investor protections come from
Regardless of the instrument, every campaign on Ardent is subject to the same investor-protection controls:
Escrow
Funds sit in a segregated trust at our custodian bank and only release when the minimum threshold is hit and cooling-off has expired.
Cooling-off
A 48-hour statutory window after you sign during which you can withdraw with no penalty.
Offer document
Every campaign ships a SEC Ghana–compliant offer document detailing terms, financials, and risks.
Investor limits
Your investor category caps annual exposure so you cannot over-concentrate risk.
Related reading
- Escrow explained, how investor money is held during and after a raise.
- Cap table management, how equity positions are recorded and how dilution is calculated.
- Secondary market, the (limited) routes to liquidity for equity holders.
- Crowdfunding Guidelines 2024 , the SEC Ghana rulebook that sits behind every instrument listed here.
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