A new finance model launched by Crowdinvest relies on groups of investors who come together and invest modest amounts in a specific high value investment opportunity and share in the financial returns.
The business model is similar to the successful “stokvels” or cooperatives that have been around for decades. Crowdinvest has just taken the concept online. It’s a world first and the process is easy.
CEO Anton Breytenback says the crowd-sourced investment platform is set to change the economic landscape. “Starting a business is not an easy job. With today’s tough financial environment, access to finance and investment is not easy to obtain.
“The potential to collect funds for your product or organisation by obtaining access to scores of prospective investors, provides anybody with an Internet link access to a little or lots of money.”
Who can list
Any person, group or business can submit an investment proposal for consideration.
You’re eligible if:
- You’re a South African citizen aged 18 years or more
- A business incorporated under The Republic of South Africa or
- Registered to do business in South Africa.
How to submit an investment proposal
Click on the “List your investment” button at the top of the Crowdinvest home page and follow the instructions. The acceptance process takes 5-10 working days.
Your investment opportunity must pass a full fraud, quality check and financial feasibility due diligence. Only then is it made available for investment.
Once your proposal is accepted, Crowdinvest assists you in creating your online investment proposal.
Why crowd-sourced funding?
- You are linked with many potential investors
- You access a large network with a direct interest in your success, creating a community of brand ambassadors from the outset
- Investors also become your clients
- It is investors’ interests to make their knowledge, expertise and even mentorship available to SMEs to ensure the success of their investment.
Empowering SA’s treps
The model has massive implications for the entrepreneurial community. The challenges currently involved in obtaining funds from a dwindling number of venture capitalist firms and angel investors have deterred many South Africans from realising their business ambitions.
“South African entrepreneurs are very limited when it comes to financing options, and as a result, many great start-ups never make it to fruition,” says Breytenbach.
“Crowdinvest makes capital far more readily available to a wide range of potential entrepreneurs. This solution will hopefully empower them to take that next step and convert their concepts into successful enterprises.”
Breytenbach points out, “Banks have very strict criteria regarding funding. We’re able to be more flexible, using an approach similar to that used by venture capitalists. The main difference is that we’re not restricted to targeting “high worth” individuals. If we see benefit in a business, we can approve funding for it.
“We also consider the stage that the business is in. So if it’s a very early stage start-up, we can refer the owner to relevant programmes and even arrange mentorship incubation with our partners that will accelerate his business to a stage where it is investable.
“Through our partnerships with various investors from a wide range of sectors we have access to a wide range of potential mentors and sources of business support.”
Naturally, Crowdinvest complies with the National Credit Act and ensures that the business owner doesn’t have bad credit record.
Another stumbling block for entrepreneurs looking to translate their big ideas into big business is the lack of available information and guidance.
Without sound business principles in place, even investors with access to sufficient capital are unlikely to be able to enjoy success in an increasingly competitive market.
As a result, Crowdinvest will also offer budding entrepreneurs access to comprehensive mentorship and incubation programmes. These have been developed to equip them with the necessary tools and know-how to effectively translate their ideas into feasible business models through strategic partnerships.
Spreading the wealth
The Crowdinvest platform has already garnered support, with luminaries such as Helen Zille having acknowledged its important role in facilitating wealth redistribution in the country.
80% of the country’s capital lies in the hands of just 2% of the population. The primary aim in building this system was to address this critical imbalance, according to Breytenbach.
Crowdinvest aims to stimulate economic growth, by driving entrepreneurial development and by offering a wide range of South Africans a chance to expand upon their earnings, thus distributing wealth more evenly.