Over the last few year more and more African entrepreneurs have emerged with all sort of startups from tech to agriculture, each one of them promising to be the next big thing on the continent.
Funding sources have however remained few and far apart forcing some of these startups to find alternative ways of raising the much needed capital. One of these ways has been to crowdfund from investors through online platforms.
In crowdfunding entrepreneurs ask the general public to invest in their businesses in exchange of small equity stakes or debts depending on the amount contributed towards the initiative.
A number of crowding funding platforms including Kickstarter and Indigogo have been around for a number of years and are well known in developed countries where they have helped several startups successfully finance their ideas.
In Africa, the idea of raising capital through these online platforms is still new, but a number of platforms have come ups in recent years. One of these is South African-based Thundafund that was launched by Patrick Schofield in 2013.
Unlike other crowdfunding platforms dotting the African continent, that are simply passive templates for startups to vie for investment, Thundafund goes further and seeks to work closely with entrepreneurs that use the platform to build their business ideas.
“People have put their hearts and souls into businesses, their life savings into an idea they think is awesome, only to find out marketers don’t like it. But with Thundafund you actually get to ask the market whether it’s a good idea,” Schofield said in a CNN report.
He says that many South African entrepreneurs lack the skills and resources to bring their ideas to fruition and end up stuck with huge debts or giving away control of their company to investors in return for guidance.
Thundafund’s relationship with businesses that raise money through its platform does not end with the fund raising campaign. They work with the entrepreneurs all through the process to optimize their chances of attracting the right type of investors and building the business to the next level.
It also don’t just let anyone fundraise on their platform.
There is a rigorous process that weeds out the not so viable ideas or improve on some of the best ideas. Due to this, the crowdfunding site has only posted 160 projects on its site so far out of the 1,400 applications it received.
“We wanted to show that crowdfunding can be successful in South Africa, and to do that we needed success stories,” Schofield told CNN.