StartMe.co.za, a new start-up, claims that South African entrepreneurs who have struggled to secure finance via traditional means such as bank loans can now take advantage of its new funding mechanism.
The brainchild of South African entrepreneurs Ben Botes and Lourie Nel, StartMe is an Internet-based funding portal which enables small investors to network and pool resources to finance projects, businesses and other ventures.
Specifically, the new venture says this involves raising capital by receiving small investments from a large cross-section of people in an Internet community, otherwise known as crowdfunding.
Funding from the crowd
The crowdfunding concept – raising small monetary stakes from a large group of investors, particularly through online communities and social networks – derives from “crowdsourcing”, whereby organisations ask the public, usually via the Internet, to do jobs typically done by their employees. The term was first coined by Jeff Howe who wrote a book on it – Crowdsourcing: Why the power of the crowd is driving the future of business.
According to Crowdsourcing.org, the emergence of crowdfunding platforms (CFPs) around the globe is accelerating. By the end of 2012 there are expected to be more than 530 platforms, up 60% since last year. While the United States leads the crowdfunding trend, with 191 CFPs, crowdfunding is also booming in Europe, with 44 CFPs in Britain and more than 100 in existence across the rest of the Eurozone.
Crowdsourcing.org predicts that the amount of money raised by international crowdfunding projects during 2012 will reach $2.8 billion, up 91% since 2011.
New concept in SA
“While South Africa has an abundant supply of finance, accessing it can be cumbersome and challenging, particularly for the budding entrepreneur. Coupled to this, angel investment is still a relatively new concept in South Africa, with few high net worth individuals actively investing in new ventures,” said Botes.
“The biggest issue facing entrepreneurs today is funding their ideas to fruition. Approaching banks requires that the entrepreneur follows certain eligibility criteria such as credit worthiness, security etc. This can lead to delays in getting the business off the ground and the potential of losing first-mover advantage. With StartMe the entrepreneur can raise money in just a few months to expand their business or start their business from the crowd,” the company lead said.
“Our platform seeks to secure financing for projects in South Africa in a variety of areas, including music, cinema, visual arts, design, fashion, innovation and technology. The landing of our platform in South Africa is part of our strategy to become a regional player in Africa as Africa presents an amazing talent pool and the growth of social networking and electronic commerce have grown significantly over the last few years within the continent,” Botes concluded.