Securing funding is one of the biggest challenges for any start-up company, as banks are traditionally cautious about businesses without proven track records. Seeing this gap in Africa, Edwige Boum founded an online peer to peer crowdfunding platform called Afrikstart. The platform provides easy and affordable access to capital across Sub-Saharan African to entrepreneurs.
Entrepreneurs who seek funding for their businesses have to pitch their projects to an audience of potential backers.
“The campaigns must include a clear description of why they want to raise the money and what they are going to do with it, a video, and images. Entrepreneurs then propose a set of ‘rewards’ for different pledge levels, a funding goal, and a timeframe to raise funds,” says Boum.
Afrikstart then curates the projects and retains a small fee if the crowdfunding campaign reaches its funding goal.
There were 57 active crowdfunding platforms headquartered and operating in Africa in 2015 of which South Africa had 21 portals and Nigeria had nine.
“The total crowdfunding market for Africa-based platforms is estimated at 32.3 million dollars in 2015, which is less than 0.1 per cent of the global crowdfunding activity,” says Boum.
Crowdfunding platforms in South Africa raised about 30.8 million dollars following Egypt with 842,000 dollars raised, then Nigeria with 314,445 dollars raised in 2015.
“Money raised by Africa-based crowdfunding portals was primarily directed to fund start-ups and SMEs by 17.7 million dollars, real estate crowd invested projects by 13.6 million dollars, travel crowdfunded trips by 319,434 dollars, and to donate to social causes and charity projects by 307,860 dollars,” she says.
This project prioritises to fund start-ups and early-stage businesses, more especially young women entrepreneurs from various sectors and industries.