I recently read through crowd funding and though this might be of benefit to me. What do I need to do in order to get a successful crowd funding campaign?
70 percent of most crowd funding campaigns never reach their funding laid out plan. If you only reach a portion of your desired pledge amount all donated funds are then returned to investors once your campaign date is up. Do your homework and make your campaign count.
To get the best out of your campaign, I would strongly advise you do the following:
- Lay out your plan way in advance
- Keep a proper and well-articulated business plan
- Create a compelling story.
- Use the social media and start a social media campaign
- Frequently promote your fundraiser, connect and interact
- Dish out rewards and incentives
- To go viral, go for educative, informative and entertaining videos
- Be more than unique and creative as more exposure will translate to more potential pledges
- Choose the right crowd funding site for you.
- Know and understand your end target audience
Where can I turn when banks are not helping?
Getting bank finance for my restaurant is almost impossible.
Getting bank finance for my restaurant is almost impossible. How else can I access the funding that I need?
Most small businesses will experience a cash flow challenge at some point during the next 12 months and raising capital from traditional banks is becoming a real challenge. Conservative lending policies and onerous application processes mean that finance applications can take up to twelve weeks or longer.
Banks require significant securities, which many business owners are unable to meet. In short, banks are making it very tough for small businesses.
The business cash advance
For businesses that accept credit or debit cards as a form of payment for their goods and services (termed merchants), the business cash advance is now available as alternative source of funding.
In simple terms, a business cash advance offers the merchant an upfront advance to buy a discounted amount of future business turnover. For example, you may be advanced R80,000 for R100,000 of future turnover, so the fees can be easily calculated as R20,000.
The payback is an agreed percentage of your turnover, paid daily until the full amount is paid across. Payback increases and drops with your business turnover and the smaller daily payments are often easier than monthly fixed instalments.
Quicker turn-around and more accessible
Comparing it to a bank loan, the business cash advance is more accessible, operates over a shorter term and requires no personal security. It is also much faster, typically available within two weeks.
The advance amount is based on historical credit and debit card sales and pay overs are daily. The costs are fully transparent and there are no penalties for late payments or extended payback. However, accessibility, flexibility and convenience come at higher cost than traditional bank lending products.
As with any financial product, it is important that the benefits gained from using the money are more than the costs, so it is important to have a good purpose for the funding and carefully consider the available options.
Over the last three years, the business cash advance has becoming more main-stream and this funding is used by business with a relatively high card turnover, such as restaurants, retailers, beauty salons, supermarkets, convenience stores etc.
What to use the advance for
The advance is typically used for a business opportunity, such as expansion, new stock, new equipment, marketing etc. Alternatively, it also offers through a difficult trading period or to cover an unexpected expense such as equipment failure when the money is needed quickly.
Small businesses are a vital part of the South African economy, contributing over 65% of South Africa’s employment and over 50% of GDP – accessing funding is imperative for these businesses to survive and grow.
Am I stupid to turn down a VC investor?
Bootstrapping your business initially will pay dividends down the line.
I’ve started my own business two years ago and I’ve recently been approached by venture capitalist investors. While I could really use the funding, I’m reluctant to give away a large portion of my business at this early stage. What should I do?
While it’s exciting to be approached by investors at any stage in your business, in the early years it might be better for the business to keep it small, keep your overheads low and bootstrap your venture as much as you can. This not only allows you to build a viable business and product offering at your own speed, it means you can to do without creating a huge amount of debt.
By building a sound and profitable business model from the outset, you will attract more attractive funding offers down the line.
Read the full article here.
How can I get innovative about funding?
There is an increase in the availability of funding mechanisms for innovation .
How do I go about finding funding for my innovative business venture?
South Africa’s venture capital ecosystem is building momentum, with the increased availability of funding mechanisms for innovation being one important driver of this growth.
Typically, entrepreneurs perceive access to funding as the major stumbling block to the bringing-to-market of their start-up businesses or ideas. And, compared with the established and thriving venture capital networks in some developed-market economies, there is indeed much work to be done in finding financial backing for innovation in South Africa.
Here are some of the options available to you:
- An important role-player is the state-funded Technology Innovation Agency (TIA), established to bring very early-stage ventures towards the point of viability and scalability. TIA last year announced that it would make R300m available for early-stage investment.
- The Industrial Development Corporation (IDC), another self-funded state-owned entity, also plays a pivotal role in financing innovation. Its venture capital fund is mandated to enable the conversion of technology-rich South African intellectual property into a market-ready product, and ultimately its commercialisation.
- The Department of Trade and Industry (DTI) offers funding support for start-ups through a wide range of mechanisms, including the SPII programme, an initiative which the IDC administers on behalf of the DTI. The DTI recently launched a dedicated website to make the selection and application for the various initiatives much simpler for entrepreneurs – a positive step in an environment mired in red tape.
Compared to government initiatives, private-sector funding for innovation in South Africa is less concentrated and fairly diverse in form, and has grown substantially in recent years.
Institutional investment into venture capital funds by private-sector institutions is rare: Pension funds, life insurers and banks, for example, are focused instead on funding more established technologies and businesses, usually through listed assets or private equity.
- Venture capital
Venture capital funds rely on investment from corporates, government, development finance institutions and family offices. The number of South African funds, as well as the value and volume of transactions, is increasing. There is also substantial interest from offshore investors and funds for active participation in the local venture capital industry. Current legislation weighs on this process, though.
- Angel networks
There has also been the establishment of angel networks, as angel investors are a critical part of the funding ecosystem and work closely with venture capital funds. Angel investors are wealthy individuals who usually are entrepreneurs in their own right, with an understanding of venturing and a passion for giving back to the start-up community.
Their backing may come in the form of allocations into a venture capital fund, in which case they do not play a role in the selection of the underlying technologies and entrepreneurs. Angel funding in other instances is channelled directly to the entrepreneur, through regular pitching sessions held by dozens of incubators and accelerators across the country, or through the angels’ own networks.
- Tax incentive
An amendment in recent years to the South African Income Tax Act has created a welcome inducement for individuals, trusts and companies to invest into innovation. Section 12J of the Act offers tax relief for allocations into qualifying and registered venture capital funds, and represents an important first step towards building a sensible and beneficial incentive structure for private sector venture funding.
- Corporate investment
Corporate investing into innovation is a further exciting trend in South Africa. Where large firms in years gone by had budgets for research and development that was overseen by in-house scientists, the move now is for companies to insource innovation by buying start-ups. In some cases these larger companies are seeing the benefits of offering the innovators early-stage business support services to increase the likely success of the commercialisation of the innovations.
- R33 Million Boost For Job Creation And Innovation In SA
- Win A Business Makeover With Retail Capital To The Value Of R250 000
- How Investors Can Take Advantage Of The Rand’s Currency Trading Rates
- Start-ups Require A Strong Legal Foundation Webber Wentzel Ignite
- Enhance Your Entrepreneurial Flair With An Online Postgraduate Diploma From The University Of Pretoria
- How To Optimise Your Productivity After Quitting Your Job
- Jason English On Growing Prommac’s Turnover Tenfold And Being Mindful Of The ‘Oros Effect’
Start-up Industry Specific2 weeks ago
How Do I Start A Transport Or Logistics Business?
Entrepreneur Profiles1 month ago
10 SA Entrepreneurs Who Built Their Businesses From Nothing
Upstarts4 weeks ago
10 Young Entrepreneurs Under 30 Share Their Start-Up Secrets
Business Plan Advice4 weeks ago
Writing a Business Plan May Not Be Your Idea Of Fun, But It Forces You To Build These 4 Crucial Habits