“Crowd funding is a trend that’s almost unstoppable, “Paul Niederer, chief executive officer of the Australian Small Scale Offerings Board (ASSOB) told CNBC Africa on Monday.
Crowd funding is defined as the use of small amounts of capital from a large number of individuals to finance a new business venture, primarily through internet platforms such as ASSOB or social media networks.
“Financial transactions can move a lot more efficiently and quicker over the internet now. People want to invest in more meaningful things. They don’t want to go through gate keepers anymore when they can rather talk directly to the people that they are investing in,” explained Niederer.
Entrepreneurs that approach platforms such as the ASSOB for funding usually have to have a few factors in place first such as a unique business venture or a good story behind the concept, a reliable team and a group of followers.
They can then get documentation together such as an offering memorandum and then attempt to attract investors that are passionate about their line of business via online platforms.
“For example, if you are passionate about underwater electricity generation, then you make sure you attract people that are also enthused about it,” said Niederer.
On average, he pointed out, 10 out of 200 people that download an offer document from the ASSOB platform, will come forward to invest in the venture.
So far, ASSOB has assisted 80 companies in Australia to raise over 130 million Australian dollars
The trend has not yet caught on in Africa however Niederer believes that it is expanding in other regions at an alarming rate and should therefore reach the continent soon.