Crowdfunding – the practice of financing a project or venture with small sums of money donated, loaned, or invested from a large pool of individuals – is already helping to fill the $140-$160 billion gap in access to financing for African entrepreneurs and SMEs.
7 crowdfunding platforms set to transform Africa's entrepreneurial scene
Increasing Internet access and a boom in ICTs is giving rise to new crowdfunding platforms in Africa with transformational effect.
There are already many African crowdfunding platforms tackling these problems in adapted ways.
GhanaianSliceBiz combines funding from accredited angel investors with micro-investments from the wider community to give projects credibility. SliceBiz also partners with global impact investors to help start-ups achieve funding to scale-up across Africa. Investors can fund via mobile payments, bank accounts, or credit cards.
NigerianFunda Solva uses PayPal – now prevalent across Nigeria – as the sole payment gateway. This opens up funding to the whole world, and taps into PayPal’s trustworthy reputation, building credibility for the site and each project. Funda Solva also accepts contributions as small as $1.
US-based JumpStart Africa also claims to have solved the payment barrier, allowing entrepreneurs to receive funding on a co-branded Visa or Master Card gift card which is then shipped to them.
JumpStart also requires that project owners verify their identity in portraits of themselves holding their ID along with a copy of a code they get sent on registration, and teams verify projects via e.g. local press. A little rustic, but more than a platform like Kickstarter does.
Kenyan M-Changa taps into Africa’s key ICT trend to gain reach in the unique African environment with a platform specifically for mobile. It allows users to create campaigns, cheaply collect donations, and promote projects via SMS or mobile payments, and allows diaspora contributors a transparent and cheap method of giving funds.
A mobile application is also on its way for South African Thundafund, a social entrepreneurship platform that hopes to create 15,000 jobs through their crowdfunded campaigns. Thundafund supports its entrepreneurs, allows only financially viable ideas to go live on the site – of the 1,400 projects submitted, only a little over 10% have been successful -, guides them through funding, and then works to get the best out of each idea.
According to Thundafund, they select carefully from all submitted applications by asking project leaders to provide necessary information; after which feedback is given on whether the business idea or innovation falls into the crowdfunding campaign model. Since launch, 4.3 million rand ($348,785) has been raised on the platform, successfully funding 116 of 150 projects.
In France, LelapaFund facilitates the African diaspora to invest their capital and skills back home. Co-founder Elizabeth Howard says it is viewed by investors as a cost-efficient and less risky way of getting involved in African projects.
And similarly Homestrings, which originally targeted only the African diaspora but has since opened up to anyone with over $1,000 to invest in emerging markets, provides vetted opportunities in projects in 13 African counties. It has raised around $25 million for projects since launch in 2011.
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