{"id":21113,"date":"2012-08-31T13:30:21","date_gmt":"2012-08-31T11:30:21","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=21113"},"modified":"2012-08-31T15:47:06","modified_gmt":"2012-08-31T13:47:06","slug":"startme-a-closer-look-at-sa-crowdsourcing","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/internet\/21113\/startme-a-closer-look-at-sa-crowdsourcing\/","title":{"rendered":"StartMe: a closer look at SA crowdsourcing"},"content":{"rendered":"

StartMe<\/a>, a website that lets South African entrepreneurs \u201ccrowdsource\u201d funding, operates on a very different model to the popular Kickstarter funding platform.<\/p>\n

Founded by Ben Botes<\/a> and Lourie Nel<\/a>, StartMe launched its site earlier this year (2012) to offer South African entrepreneurs a place to raise money in many small increments from a group of investors.<\/p>\n

This method of raising money is called \u201ccrowdfunding\u201d, with users from all over the world allowed to pledge money towards a project, or create their own projects that others can then help fund.<\/p>\n

To encourage pledges, project creators typically specify \u201creward tiers\u201d in addition to the amount of money they would like to raise.<\/p>\n

Perks are given to investors according to the scale defined by the entrepreneur\u2019s reward tiers. Rewards can range from an acknowledgement to a physical product.<\/p>\n

Projects on Kickstarter<\/a> only receive their funding (and backers their reward) if it receives enough pledges to make its goal. Kickstarter then takes 5% of all the money that goes to successful projects.<\/p>\n

Credit card processing fees to Amazon are also applicable, which Kickstarter says on its website amount to another 3\u20135% deducted from the amount entrepreneurs raise.<\/p>\n

A different model for SA start-ups<\/strong><\/p>\n

StartMe has opted for a different model, however, with pledges collected and given to project creators if at least 50% of the goal amount is raised.<\/p>\n

The fee structure at StartMe is different as well, with projects that don\u2019t achieve their goal being charged 9% of the money collected, while projects that hit their target are charged 5%.<\/p>\n

\"Ben

Ben Botes<\/p><\/div>\n

When asked about their choice of model, StartMe co-founder Ben Botes said that in this respect, StartMe\u2019s model is similar to that of one of Kickstarter\u2019s main competitors: Indiegogo<\/a>.<\/p>\n

\u201cEntrepreneurs can choose if their project is listed as one that is flexible,\u201d Botes said. Selecting the \u201cflexible funding\u201d option means a project can take pledges higher than 50%.<\/p>\n

The 9% fee applies to projects that raise between 50% (inclusive) and 100% (exclusive) of their goal amount, Botes clarified. This is to encourage entrepreneurs to opt for the 100% goal, Botes said.<\/p>\n

There are differences between Indiegogo and StartMe\u2019s models worth noting, however.<\/p>\n

Indiegogo\u2019s flexible funding option lets fundraisers keep whatever money is pledged to their campaign. The fee if the goal amount is missed is also 9% on Indiegogo.<\/p>\n

Should a campaign make its target, however, Indiegogo charges a 4% fee where StartMe charges 5%.<\/p>\n

\u201cThere are numerous crowdfunding sites around the world and a whole range of different practices on when the entrepreneur can claim the monies pledged to them,\u201d Botes said.<\/p>\n

\u201cOur thinking is that raising at least 50% of your goal amount may well enable you to either start on a smaller scale or enable you to raise the rest of the money from the bank or external investors as you would already have raised 50% of the money needed.\u201d<\/p>\n

Similar to Kickstarter, Indiegogo also warns of an additional third-party credit card processing fee. According to the Indiegogo website the fee is a flat 3%. Non-US campaigns are charged an additional $25 wire fee and may also attract currency exchange fees.<\/p>\n

StartMe\u2019s isn\u2019t specific about third-party fees, and Botes said that PayFast<\/a>, the payment processing service StartMe uses, may raise a financial transaction charge.<\/p>\n

The PayFast website explains that they charge for receiving money, but not sending money, and also charge for transferring money to a bank account from a PayFast account. EFTs are charged a 2% fee and credit card payments 4.9%. A payout to a bank account costs a flat R8.77 (excl. VAT).<\/p>\n

Another difference between StartMe and Indiegogo is that it requires investors to buy \u201cinvestment credits\u201d to pledge to projects.<\/p>\n

Sites like Kickstarter and Indiegogo let users pledge using a credit card. Kickstarter only deducts money if a project is successfully funded, while Indiegogo says that it deducts money immediately.<\/p>\n

Should an Indiegogo project not be successfully funded, contributors are sent refunds to their PayPal accounts.<\/p>\n

Asked about StartMe\u2019s choice to require the purchase of site credit before users are able to contribute, Botes said that such an approach is used by many crowdfunding sites.<\/p>\n

\u201cIt provides more security that the money pledged will actually be given to the business,\u201d Botes said.<\/p>\n

\u201cThe money pledged still only goes to the project creator if the project is successful,\u201d Botes pointed out. \u201cOtherwise the credits are returned to the person who pledged them.\u201d<\/p>\n

\"Accredited

Accredited crowdfunding platform badge<\/p><\/div>\n

Accredited<\/strong><\/p>\n

Until recently, StartMe displayed a badge in its footer stating that it is an accredited crowdfunding platform.<\/p>\n

The badge has been removed from the site, but Crowdsourcing.org lists StartMe on its page for Crowdfunding Accreditation for Platform Standards (CAPS<\/a>).<\/p>\n

Queried about the accreditation, Botes said that platforms such as theirs need to comply with a range of rigorous standards and requirements in order to be accredited.<\/p>\n

\u201cThe strong reputation of the industry is obviously in everyone\u2019s interest,\u201d Botes said. \u201cCrowdsoucing.org also provides support and guidance to platforms like ours.\u201d<\/p>\n

Kevin Berg Grell<\/a>, CAPS program director, confirmed StartMe\u2019s accreditation.<\/p>\n

Other sites listed on Crowdsourcing.org under \u201cSouth Africa\u201d (though none of them sport an accreditation badge) include BrandsEye, Hiring Bounty, and SASIX.<\/p>\n

Related articles<\/strong><\/p>\n

SA crowdfunding start-up unveiled<\/strong><\/a><\/p>\n

Kickstarter responds to \u2018failed project\u2019 claims<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

StartMe, a website that lets South African entrepreneurs \u201ccrowdsource\u201d funding, operates on a very different model to the popular Kickstarter funding platform.<\/p>\n","protected":false},"author":12,"featured_media":18125,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9882],"tags":[3602,3989,3990,26,3993,3992,3991],"class_list":["post-21113","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-internet","tag-ben-botes","tag-crowdfuncing","tag-crowdsourcing","tag-headline","tag-kickstarter","tag-lourie-nel","tag-startme"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/21113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=21113"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/21113\/revisions"}],"predecessor-version":[{"id":21139,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/21113\/revisions\/21139"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/18125"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=21113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=21113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=21113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}