These 4 SA startups are raising funds through crowdfunding
And what you need to know to make a success of your campaign
Two Western Cape entrepreneurs have just raised over R200 000 towards achieving their dream of opening their own wine bar, Proof, in Somerset West.
Rather than take out a bank loan or reach out to an angel investor - Dan Crowe and Wayne Mongie, made the decision to reach out to their network of friends and family and strangers and launched a fundraising campaign with Thundafund, a South African crowdfunding platform.
On their Thundafund profile - where they are able to appeal for support - they describe their goal as follows: "We live in the Winelands, but we don't have a decent wine bar in town. Whether you're planning a girls night out, a few drinks with your partner or friends or just a decent place to unwind after a hard day at work, your options are very limited. We need a good wine bar in town and this is your chance to help make it happen."
Their 'Dream Goal' (Thundafund allows users to set dream and tipping point goals) is to raise R325,000 which they say will allow them to buy all the bar amenities and equipment they need, "to create the customer experience we want to offer." So far they have surpassed their tipping point goal of R200 00 and have raised R201 100.
Funding and market validation
The Proof campaign is achieving two objectives: to get the funding they need, and perhaps most importantly, to find out if their wine bar idea has any legs.
"While we’re in the fortunate position of being able to call on investors who’d happily invest the capital we need to start the bar, we believe that the long term success of such a venture doesn’t rely on the money it takes to buy furniture and fit out premises but rather on the customers who’ll be frequenting the place for years to come. By crowdfunding the business, we’re getting the community involved in our vision from day one and everyone involved will benefit for a long time to come," they say on their website.
They have also made rewards available to all their supporters. From branded trucker cap to bar tabs and private parties.
Crowdfunding for capital
Crowdfunding is nothing new. In an interview with SME South Africa, Nokwazi Mzobe, founder and lead consultant of Matoyana Business Solutions, a business consulting company, said more small business owners needing financing should consider crowdfunding.
"Crowdfunding, is the practice of funding an idea, project or business by raising money through contributions from a large number of people. Crowdfunding has also democratised access to finance by lowering the barriers to financing opportunities for charities, creatives and entrepreneurs in an exciting way we've never seen before," she says in an article on Bizcommunity.
Other well-known crowdfunding platforms are Kickstarter, FundFind, Jumpstarter and StartMe.
"Any startup can make use of our platform, but they need to know where their funding will come from"
How to run a successful campaign
The success of a campaign relies heavily on your network, says Lisa Young and Sasha Benjamin from Thundafund . "Any startup can make use of our platform, but they need to know where their funding will come from."
Young and Benjamin share what entrepreneurs need to run successful campaigns and the 3 SA businesses with a strong social impact that are currently fundraising on their platform.
The platform is well suited for entrepreneurs, it allows them to raise accountable capital in a way that does not load them with debt or force them to part with equity in the early stages.
It functions as a marketing campaign for your startup, in order to get your startup funded you have to network, market and advertise your campaign. If you are successfully funded you now have a captive audience for your product or service.
Startups that do well raising funding on Thundafund are businesses who have a strong cult-like following eg. Ideas Magazine, Labia Theatre, Honest Chocolate do really well as there is strong support base. The creative industry has a lot of success on Thundafund this includes, music, publishing, theatre, design and films. Social enterprises who are both innovative and caring to South Africans and our county.
... and those that don't. Historically tech doesn’t perform so well as websites and apps don’t have tangible rewards on offer or have a preexisting network.
The process is self sign up, with guidance from us along the way. There are three aspects to our model: Rewards-based, a startup has to be able to offer a reward at different pledge points; and All-or-Nothing, this means you have two goals, a Dream Goal and a Tipping Point. If you don’t reach your Tipping Point all the funds raised are refunded to the backers. You also need to have a South African bank account.
You have to set the duration of your campaign either, 30,45 and 60 days. It’s then up to you to market your campaign and get the funding you need. We can provide assistance but it’s up to the startup to get the required funding.
What it takes to create a successful campaign
- 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.
- Between 4 – 8 unique project-related rewards, of increasing value and cost, for backers that are in the form of retail, recognition and/or experience.
- An active, updated and engaged social media presence such as a Facebook Business Page people can like 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.
- Inform your immediate network of your soon-to-be campaign and excited them about backing your campaign upon its launch.
- A thorough understanding of your target audience.
- The time, money and commitment to run your campaign… don’t underestimate this.
Here are 3 businesses that have used the platform to raise funding and whose success was strongly tied to their social mission.
Social mission: Healthy eating
Lufefe Nomjana is the brains behind Espinaca, a green business which bakes bread and muffins made with spinach and a key driver of the healthy eating movement in the townships of Cape Town.
Their crowdfunding campaign: Espinaca was looking to raise R20 000 to go towards bicycles with baskets to help with deliveries, branded Espinaca Innovations helmets, secure lock-up chains and maintenance kits for the bicycles. So far they have raised R11,200.
Ground UP Barista Academy
Social mission: Job creation and youth empowerment
The Ground UP Barista Academy is an initiative of Learn to Earn which trains unemployed people to become baristas. They are based in the Western Cape.
Their crowdfunding campaign: Groundup's goal was to raise R75 000 to help fund a second coffee unit, which will cover: a two-group commercial espresso machine (R55 000) and automatic dosing, heavy duty grinder. In their original plea they say: "Your donations will provide an opportunity to an entrepreneur to earn an income, while being mentored in running a franchise business. By partnering with the unemployed, we change lives from Ground UP."
Social impact: Sustainable food deliveries
JarBar is a startup by two Cape Town-based entrepreneurs, Tanya Vee and Ella Bertie-Roberts. The food startup makes daily deliveries of soups and salads to office workers in Cape Town.
Catering for vegans, vegetarians and meat eaters, the company also focuses on sustainability.
Their soups and salads come in reusable jars so there’s no packaging and less impact on the environment.
Their crowdfunding campaign: For their first tipping point goal, JarBar aimed to raise R40 000 to grow their business. The funds went tocompleting the development of their website, buying more Jars and printing them, putting down a large deposit on a delivery vehicle, and boosting their marketing efforts, among others. They have a second milestone of R80 000 and a third of R95 000. They have raised R40,600.