Educating the Crowd
Crowdfunding has become a familiar concept to many. This is evident with the number of projects on Thundafund, South Africa’s largest crowdfunding platform, increasing from 32 live projects in 2016 to 75 in 2017. Equity Crowdfunding, although existing since as early as 2010, is new in South Africa. With this comes the need to educate and inform the various stakeholders about this innovative model.
“Crowdfunding is hopelessly dependent on traditional funding sectors to educate a new generation of investors and fully develop the industry” (Crowdfund Insider). At funding fairs and networking events for entrepreneurs and investors (traditional spaces of funding), Equity Crowdfunding is referred to briefly or as a side note if mentioned at all. This dialogue needs to change and instead gear towards discussions of other funding models and extend beyond traditional spaces; to create its own alternative discourse events, webinars, and workshops.
“More options are an educative forum or program for crowd-investors and professional investors, to professionally track crowdfunding developments (e.g. how many crowdfunded companies still exist after x years?, is the crowdfunded money used to its intended goal?, etc.), creating affiliate programs between crowdfunding platforms and traditional institutes (like crowdfunding as a first phase towards debt funding via the bank) and integrating the overall crowdfunding industry as part of a hybrid funding trajectory” (Crowdfund Insider).
Emma Kaye founder and CEO of Bozza, a mobile platform for musicians, shared her experience of being an African startup on Emerging Crowd- a UK based Equity Crowdfunding platform: “It was a learning curve. The platform had to educate the public about investing in African startups as we were one of the first African start-ups using a platform to seek international investment. It was an amazing experience but not without its challenges”. These challenges exist for entrepreneurs and investors alike which is why it is so important for both to understand Equity Crowdfunding as a model thoroughly. The risks are high, it is not easy, but it can also be extremely rewarding.
Many entrepreneurs fall under the assumption that very little input is necessary from their side; however, a successful campaign requires initial capital and activating your network as much as tapping into your crowdfunding platform’s database. Emma’s final advice to entrepreneurs planning on running an Equity Crowdfunding campaign is “I would suggest startups are clear about their needs and how they will be met through the platform, understand the legal issues, ensure the platform supports them, and understand the necessary time, energy and money required”. She further adds, “My highlight of the crowdfunding campaign was understanding Equity Crowdfunding and how powerful it is when done properly”.
Entrepreneur or investor, it is your responsibility to be informed of trends, new developments and news in the startup ecosystem. Educate yourself about Equity Crowdfunding, share your knowledge with your network and create necessary discourse.
Watch informative webinars on Equity Crowdfunding here.
*Emma Kaye founded Bozza a mobile platform which enables African musicians to self-publish and distribute directly to their audiences. Emma also founded Gate7 a new media, content and mobility company and co-founded an African mobile brand -Triggerfish Animation Studios. Having started several tech related companies her core focus has and remains to be ‘using technology in innovative ways to unlock the creative currency on the continent’.