The idea of crowdfunding has been in existence for centuries as crowds gathered to hear and support pitches. With the help of digital technology and social media crowd funding has been taken to new heights and expanded the playing field for many investors and entrepreneurs. In South Africa crowdfunding offers new opportunities to invest in the growing SME market. It is a mechanism that enables broad groups of investors to fund promising start-up companies and small businesses.
Thundafund
Thundafund is one of the leading crowdfunding Platforms in South Africa for entrepreneurs with creative and innovative ideas. Founded in 2013 by Patrick Schofield, Thundafund also offers business mentorship apart from allowing entrepreneurs to raise capital. The platform has about 25 000 supporters, and has funded over 1 400 projects, and the fund has raised more than $3 million so far. Thundafund is not limited to South Africa only but also caters for African entrepreneurs who wish to raise capital for their various projects.
To qualify for funding on the Thundafund Crowfunding platform you need;
- A specific project or idea that you need funds raised for.
- A realistic, suitable and defined crowdfunding goal.
- A set time-limit suitable to your crowdfunding goal and campaign mission.
- A campaign pitch that explains the ‘who, what, where, how and why’ of your campaign.
- A maximum 1 – 3 minute pitch video this is highly recommended
- Between 3 – 5 unique rewards, of increasing value and cost, for backers that are in the form of retail, recognition and/or experience.
- Detailed and specific Milestones to cover the ‘bare-necessities’, the ‘nice-to-haves’ and the ‘dream’.
- An active, updated and engaged social media presence such as a Facebook Business Page people can like, Instagram and a Twitter account.
- A marketing and PR ‘campaign plan’ covering pre-launch, launch, mid-campaign, pre-closure and closure.
- A fundraising marketing savvy campaign team-leader and/or team.
- Thorough research on previous similar successful campaigns.
- Informed your immediate network of your soon-to-be campaign and excited them about backing your campaign upon its launch.
- A South African/Kenyan bank account.
- Project creators have to be over the age of 18.
- If you are under 18 you can submit a project: to do so you will need a project collaborator – a parent, guardian or teacher. Your project collaborator must register for the Thundafund campaign, be the payment account holder and take responsibility for the project roll out.
- A thorough understanding of your target audience.
- The time, money and commitment to run your campaign, don’t underestimate this
These requirements are also relevant with most crowdfunding platforms
Uprise Africa
Another leading crowdfunding platform in South Africa is Uprise Africa. Uprise Africa offers a platform where people can invest in early stage businesses and startups in return for equity. This crowdfunding platform was founded in 2017. Entrepreneurs who want to make use of Uprise Africa funding platform to raise capital must have a FICA documentation and should be available to answer any questions that investors may have. Entrepreneurs can set their funding goal only up to R50 million. Also, only private limited companies can raise funding via this crowdfunding campaign. Given that crowdfunding is still new in the country, the current regulations governing the platform’s operations do not place restrictions on the platform being used as a fundraising platform by Pty (Ltd) companies.
How To raise funds on the Uprise Africa Platform
- Register on the platform
- Engage with a large community of equity investors
- Browse investment opportunities and invest
- Fill out a pitch application to start a campaign
South African Angel Investment Network
The third crowdfunding platform in South Africa for entrepreneurs is the South African Angel Investment Network. However, anyone seeking funding can only become a member after paying a certain subscription fee. The South African Angel Investment Network allows entrepreneurs to pitch their business model to local and international angel investors for capital. Entrepreneurs are required to register and pitch through the online platform like every other crowdfunding platform. In addition to a concise introduction to the business and who the entrepreneur is as a professional a pitch must include a registered name and a website for the business or project. The South African Angel Investment Network allows entrepreneurs to be introduced to the correct investors and are able to accept funds from investors at any time. With over than 200 000 investors the platform has Over $400 million raised for its members to date. To raise capital on South African Angel Investment Network simply follow the following steps;
- Register, the platform has over 200 000 investors worldwide
- Create a Pitch, You can access some ideas or templates on the website to create your own pitch
- Publish your Pitch, your pitch can be emailed to investors and personalized messages can be sent to individual investors
- Connect with Investors, If an investor likes your pitch, you will receive an email notification. You’ll then have access to their contact details to continue discussions, schedule calls, fix meetings and close the investment
- Complete your Fundraise
Livestock Wealth
Livestock Wealth is a unique crowdfunding platform where farmers can connect with investors. Founded in 2014, this platform facilitates the connection between farmers who need working capital and investors who want to invest in growing assets, but don’t have the means to do so themselves. Anyone can become a farmer with Livestock Wealth since anyone can buy livestock, or make a plant based investment from the farmer. The asset grows in the farmers care and at maturity the farmer buys back the asset once it has fully grown at harvest, in turn the investor makes a profit from the sale.
Some of the investment and funding options available on the platform are as follows.
- Macadamia nuts, one of the highest-earning agricultural product per hectare that is maintained for you at no extra cost
- Free range ox, you can invest or seek funding for a free-range ox in it’s last 6 months
- Entrepreneurs can access funds for a pregnant cow
- As an investor you simply select your investment option, add to your portfolio, confirm order checkout and watch your investment grow.
The People’s Fund
One of the first back-owned crowdfunding platforms in South Africa, The People’s Fund, launched in 2017. The People’s Fund is a purchase order crowdfunding platform for businesses that have orders with government and corporate and are looking for capital to deliver these orders. This fund has partnered with some of South Africa’s networking communities to black entrepreneurs such as The Hook Up Dinner and Playbook as well as Brownsense. The People’s Fund focuses mainly on black-owned innovative businesses. The platform also requires that entrepreneurs pitch their business model to one of The Hook Up Dinners. With The People’s Fund anyone can contribute various amounts even as little as R100 to fund a purchase order. In return the entrepreneur shares some of the profits from the project with the investors, and every other member of the crowd in that project.
Another interesting thing about The People’s Fund is that the platform allows investors such as individuals, corporations, and even stokvels to purchase an asset for a business. These investors are then paid back a royalty for as long as the asset lasts.
The preferred purchase order clients for the crowdfunding platform are as follows,
- Eskom
- Gauteng Department Of Health
- Transnet
- KZN Department of Transport
- KZN Department of Health
- Gauteng Department Of Education
- South African Medical Research Council
- 3L development
- South African Local Government Association (SALGA)
- National Health Lab Services (NHLS)
- Gauteng Provincial Legislature
- Sun International
- Anglo American
- Dwarsrivier Chrome Mine
- UNISA
- Tshwane Municipality
- Department Of Defense
- Correctional Services
- Justice and Constitutional Development
- SAPS
- Generic Electric previously Alstom
- Limpopo Dept of Transport
- Rand water
- Gauteng Department of Social Development
- Home affairs
- Joburg Water
- Metrobus
- Western Cape Health
- Gauteng Department of Higher Education
Jumpstarter
The last popular crowdfunding platform in South Africa is Jumpstarter. Jumpstarter is a non-profit crowdfunding platform which was founded in 2011. Through this platform Jump entrepreneurs receive funding or donations in exchange for rewards. Jump Starter makes use of the 100%-or-nothing funding meaning that the businesses need to be fully funded or no money will be exchanged. The platform has funded over 18 projects raising about R520 920 for various businesses in technology, food, film, fashion and design, and art to name a few.
Tips to for launching a successful jump starter crowdfunding campaign
- Share your story. Promote your story and let your potential funders know how your product or business idea can benefit them.
- Offer great rewards.
- Set a funding goal.
- Promote your campaign.
- Update your backers as your project progresses.
- Fulfil your promises.
- Find a viable means to monetize your pain point
- Find a manufacturer or partners you can work with.
When it comes to crowdfunding, it is important to understand that as an entrepreneur you are trying to create a relationship with the people or companies that you are seeking funding from. It is important that you present your product or idea well so that it spreads fast and attracts funding.
