Up-and-coming South African film producer Meg Rickards is one of the people who often complain about banks being unwilling to lend money for start-ups in Africa. Her company had only 70% of the budget and didn’t know where to find the rest. It was for this reason that she decided to try her hands at Thundafund – a local crowdfunding site in South Africa. After three months, she raised a total of 106,800 rand ($8,665).
She said that crowdsourcing gave them important cash flow during the initial stage. It also helped them to build an engaged customer base.
Crowdsourcing Innovation
Thundafund is essentially a crowdsourcing platform that was launched back in 2013 by Patrick Schofield. According to Schofield, who is also the company’s CEO, the platform was developed with the main focus on improving innovation and entrepreneurship in Africa.
Crowdsourcing is already well established concept in the United States and Europe. Mr. Schofield believes that it can also become a powerful driving force of economic development in the African content, as well.
Thundafund was therefore launched to be part and to lead the rapid economic development in Africa. 18 months after it was launched. Thundafund has raised 4.2 million rand (about $348,785). Mr. Schofield said that he preferred South Africa over other countries since the country has a long history of group-based fundraising.
The platform encourage users to use online channels to raise funds. Thundafund lets entrepreneurs and project creators to reach as many people as possible to discuss about what they are looking to do.
Meg Rickards says that her crowdsourcing campaigns has helped her to create some good publicity and gave her start-up a large customer base. Even so, she does not think that crowdsourcing is feasible as a primary source of funds. She warns that crowdsourcing is not an easy job. It is hard work. She and her business partners raised about 2 percent of their final budget through crowdsourcing. It is not much but quite useful in creating support.
Other platforms for Africa
There is another crowdfunding site in France raising funds for African projects. LelapaFund was established to target Africans living abroad but who want to support or invest in projects back home. So the people who invests in Africa are the African themselves. Elizabeth Howard, the co-founder of LelapaFund said that they wanted the African diaspora to be able to invest their skills and money back home. It is one of the less risky ways of investing in Africa.
The idea was to help Africans leaving overseas to invest in businesses back home. But there are still challenges. Money raised in some countries, such the United States, is costly and extremely difficult to transfer to Africa. Crowdsourcing may help deal with this issue, but this does not mean it offers money.
Different platforms have different audiences. Small businesses or and start-ups should make the most of crowdsourcing if they want to succeed. There is also need to approach the market a different way.
Market Research
Most crowdsourcing in Africa were made popular through the Internet. This is mostly likely because of the accessible markets via social media, especially Facebook, Twitter and Google Plus. Crowdsourcing and social media go hand in hand.
An interesting and well-presented idea will definitely spread like bushfire, thanks to tweets, shares, comments and likes across platforms. This is more effective than it would through word of mouth. Conventional advertising alternatives will definitely cost one an arm and a leg.
South Africa has over 8.5 million internet users, according to Internet World Stats. And more than 6 million people in South Africa are active Facebook users. This number however does not leave enough room for research but it shows the potential market for crowdfunding.
