A Guide to 100% Local Crowdfunding Platforms – 3 Options you Should Consider
“In five years time people will see crowdfunding as a no-brainer when it comes to launching a new idea or project.
“Why would you spend your time and cash on an idea without first asking your future customers if they would buy it? Crowdfunding is the ultimate in the democratisation of finance,” wrote Patrick Schofield in 2013.
Schofield is behind the country’s oldest and newest crowdfunding platforms – ThundaFund, which launched in 2011, and Uprise Africa, launched in 2017.
More platforms have come into the market – each offering a diverse range of benefits. To find out which one may be ideal for your fundraising needs we take a look at 3 platforms – Uprise.Africa, Thundafund and The People’s Fund.
1. UPRISE.AFRICA (Equity Based)
Uprise.Africa launched in 2017 and is the first equity crowdfunding platform in South Africa. It allows private individuals to invest in early-stage businesses in exchange for equity.
The goal of the platform, according to a SME South Africa article, is to enable everyone to invest in startups, not just professional investors.
Any business can register on the platform to receive funding, however in an interview with SME South Africa, Inge Prins, CMO of Uprise.Africa said that they are looking closely at the food and drinks sector for their first few campaigns.
The Uprise.Africa team announced in January that they had launched their first campaign, Storied SA, an initiative by independent South African publisher Jacana Media. The focus of the initiative is on publishing local fiction and creative writing. They have already raised R10,800 and aim to raise a total of R3 million.
To start with, project creators must have FICA documentation. The platform also allows both non-South African and South African citizens to invest.
According to their website, entrepreneurs behind each campaign will need to be available every day to answer questions from investors and select media appearances.
The platform allows users to set their own funding goal, the maximum is R50 million.
In addition to linking investors with startups, the platform also serves as a space for small business owners to receive feedback from investors, get help reaching their target market, and to test the viability of their offering, according to a SME South Africa article.
2. THE PEOPLE’S FUND (Royalty Based)
The People’s Fund is the first black-owned crowdfunding platform in South Africa. The platform launched in 2017 and is a collaboration between one of SA’s largest networking communities for black entrepreneurs, Brownsense, networking community, The HookUp Dinner and Paybook, a digital marketing company.
The platform allows individuals, stokvels and corporates to buy an asset for a business and then be paid a royalty by the entrepreneur for the lifespan of that asset.
The platform is exclusive to black-owned and innovative businesses.
An example of a campaign is Buy-A-Beehive by entrepreneur, Mokgadi Mabela. The campaign asked investors to contribute towards the acquisition of new beehives. The royalty for those backing Mabela is R32.40 for every kilogram of honey harvested from the hives they have funded for the next six years.
Every one of the entrepreneurs with a campaign have pitched at one of The Hook Up Dinners and won their respective nights against four other entrepreneurs. Each business is also vetted for business viability and whether their raise requirement is realistic.
Amounts have ranged from R240,000 all the way to R20 million.
According to the website, the platform exposes startups to potential customers and ‘evangelists’.
3. THUNDAFUND (Rewards-based)
Thundafund, is one of the best known crowdfunding platforms in the country. The fund, which launched in 2011, operates on a ‘rewards-based’, ‘All-or-Nothing’ crowdfunding model, meaning the project creators essentially ‘presell’ project-related items, known as rewards, to backers in return for their financial contribution. These rewards include retail items, recognition and experience.
According to their website, ThandaFund targets creative and innovative projects that must fit into any of the following 13 categories: art and photography, community, crafts, design, events, fashion, film and video, food and beverages, media and publishing, music, performance; sport, and technology and games.
One of big fundraisers on ThundaFund includes a wine bar, Proof, located in Somerset West which was launched by entrepreneurs, Dan Crowe and Wayne Mongie.
The two entrepreneurs raised over R200 000 in 2017 towards achieving their dream of opening a wine bar, according to a SME South Africa article.
The fund is strictly for serious projects. The platform has turned down about 1400 applications from individuals attempting to raise money to pay off their debts.
Other requirements for a campaign, according to the website, include, but are not limited to: a campaign pitch, a South African bank account, unique rewards for backers, an active social media presence, a PR ‘campaign plan’ covering pre-launch, launch, mid-campaign, pre-closure and closure and finally, an understanding of the target audience.
Project creators also have to be over the age of 18. If applicants are under 18, they will need a project collaborator to register for them, be the payment account holder and take responsibility for the project roll-out.
According to the website, project creators can ask for any amount from R5,000 to R50,000, however, they can also ask for millions depending on what the creators are looking to fund and the profile of the investors/backers.
Pledges average between R100 and R1000 and can range upwards substantially.
ThundaFund offers free marketing. Campaign creators are also able to test the viability of their product and target market based on whether anyone invests, and also who invests.