Crowdfunding: Ubuntu finance in South Africa

What if you could fund your dreams right now?

Many South Africans dream of getting their concepts off the ground, but they lack the funding to make it reality. Too often their ideas are put on the back-burner for ‘one day’ – when they have accumulated enough wealth; when they finally secure that loan; or when the right investor shows up carrying a suitcase filled with cash.

Enter crowdfunding, fast becoming a viable option for investors and business owners – offering a means for start-up businesses to seek capital, and for investors to look for places to invest their money and time.

What is crowdfunding?

Subhas Shah, project and community manager at one of South Africa’s biggest crowdfunders,, defines crowdfunding as “an online lever allowing the public to bring projects to life, financially and collectively.”

In short, it can be defined as funding by the people – a model that aligns well with the African concept of Ubuntu (loosely translated as the spirit of community and togetherness).

The concept is based on the crowdfunding model that has experienced extraordinary uptake in the Americas and Europe. Thundafund is one of many such sites emerging in South Africa, joining the likes of StartMe and Fundfind.

At its core, allows a large number of people to each invest small amounts into a project or idea. In essence they pre-sell ‘rewards’ related to their project to backers in exchange for their contribution. Small amounts soon add up to the capital required, simply due to the crowd factor. 

Although it’s a relatively new concept in South Africa, it has taken off. According to Shah, Thundafund has already brought in R4 771 358 from 5 217 people, successfully funding 128 projects since its founding in June 2013.

An investor’s perspective 

Keet van Zyl, co-founder and director of Knife Capital, has invested some of his own time and money in crowdfunding projects he believes in – including Kenya’s BRCK through Kickstarter, and local entrepreneur Hannes van Rensburg’s upcoming book through Publishizer. In the book, Cash in Cash out,  Van Rensburg tells the incredible story behind the rise of Fundamo, the mobile payment company he sold to Visa for $110 million.

Knife Capital has also involved itself in crowdfunding, contributing to local computer vision and radar company iKubu’s campaign on US-based crowdfunding platform Dragon Innovation. The funding enabled iKubu to develop its safety device for cyclists, the ‘Backtracker’.

The device consists of a back light and radar unit mounted on the rear of a bicycle, and a front unit that indicates the speed and distance of cars approaching from behind the cyclist.

As a result of this innovation, iKubu was acquired by navigation company Garmin earlier this year.

 “Crowdfunding involves large numbers of people collectively investing smaller amounts of money in projects. For the entrepreneur who understands how it works, it can be a powerful tool,” says Van Zyl.

One legendary crowdfunding story involves a little known US company called Pebble Technologies which three years ago crowdfunded its e-paper watch, known as the Pebble. Launched on Kickstarter with an original funding goal of $100 000, the Pebble raised over $10 million and the no-frills smartwatch became the darling of both the wearable industry and crowdfunding community.

Van Zyl warns that while it’s a great way for entrepreneurs to get their ideas off the ground, equity crowdfunding to raise money for companies still has a long way to go. For the investor, what they get out of it can be more linked to the satisfaction of contributing rather than return on investment, making crowdfunding ideal for creative projects. It still needs work when it comes to funding a business. Luckily, Van Zyl says that the models are evolving.

“As always, one needs to do your research on who to partner with and what the main goals are. It could just be something like market testing or raising awareness.

“It addresses a definite need, but there is still a lack of ‘mentorship capital’. For a high-growth venture to succeed, one needs to combine knowledge, networks and funding. In most cases, projects only contribute funding,” he says.

 Van Zyl’s tips for a successful campaign:

  • Know why you are doing it and what you aim to achieve.
  • Plan your campaign in advance.
  • Gather early support from your immediate network.
  • Use the right crowdfunding partner for your project.
  • Create profile-raising activities.
  • Adapt and iterate during the campaign.

 When a project fails…

Even when a project doesn’t reach its goal, it can still prove successful in other ways.

One such campaign is Tourism Radio, South Africa’s crowdfunded initiative, which kicked off in September 2013 and hoped to deliver interactive Google Glass travel guides by April 2014, six months after the end of the campaign.

It did not raise enough funds to make the project a reality, but Jonathan Meyer, Tourism Radio’s content manager, says that the campaign still proved successful in terms of the interest and publicity it generated. “We were almost immediately contacted by interested parties from across the world, some of which proved fruitful.”

Why did it fail? Their project, he says, relied too much on Google Glass becoming a household item, which led to backers choosing a “wait-and-see approach”.

Meyer adds that crowdfunding needs to be flexible – those who adapt to their backers are more likely to succeed. “Personally I believe it is about getting backers to not only invest in your campaign financially, but emotionally.”

It is a case of adapt or sink, especially when you are being funded by the public: “Funders who also adapt their projects in response to their backers are generally the ones that are successful.”

The future of Ubuntu funding

 While crowdfunding in South Africa is still new, it is already able to offer a platform for those who dare to dream far beyond their current means.

Sometimes getting an idea off the ground takes a village, other times it takes a crowd….


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