The Uprise.Africa platform is hosting a crowdfunding initiative for a Beerhouse that is set to open at the site of the former Starlight Diner in Tygervalley in October. Renovations began this week.
This will not be the first beer business to raise equity via the platform. Inge Prins, founding member of Uprise.Africa, says it has paid out investment funds to Drifter Brewery Company following a campaign that raised R3.89 million, in excess of its original equity crowdfunding goal of R3 million.
The craft beer market in South Africa has grown over the last 10 years, with more than 50% of craft beer production taking place in the Western Cape.
Beerhouse is earning a name for its extensive menu and the ’99 bottles of beer on the wall’, which founder Randolf Jorberg admits “might have something to do with the song”.
Jorberg owns the Beerhouse in Fourways and another in Long Street, Cape Town, and says the equity crowdfunding idea came about after a random customer expressed an interest in becoming a shareholder.
If the Tygervalley Beerhouse campaign is successful, its shareholders will have the advantage of liquidity since Uprise.Africa has entered into a partnership with ZAR X – a fintech-based licensed stock exchange that will list start-ups and small companies that have successfully raised capital for trading on the bourse.
Investment participation starts at R1 000 for a single share and is capped at R250 000 per investor. The campaign was launched in July and will run until September 14. It has a target of R3 million, and by Wednesday (August 7) had raised R729 000 from 56 investors for just over 37% ownership.
If unsuccessful in reaching its R3 million target, Uprise.Africa will return any funds invested by potential investors.
The crowd is growing
According to the World Bank, the overall market potential for crowdfunding in sub-Saharan Africa will be $2.5 billion by 2025. Traditional business funding models currently include bank loans, venture capital, private equity and government grants.
Uprise.Africa CEO Tabassum Qadir says the group aims to disrupt South Africa’s traditional funding landscape by providing an alternative method for small businesses to raise capital.
“We are simplifying venture capital through this mutually beneficial partnership for entrepreneurs and investors.
“It means when you have a business idea, you can leverage the Uprise.Africa platform to potentially raise capital quickly and can ultimately list on a licensed stock exchange, making your shares tradeable,” she says.
Uprise.Africa is currently the only equity crowdfunding platform in the country with a category one licence from the Financial Sector Conduct Authority (FSCA), which enables it to provide advisory services.
Equity crowdfunding set to get formal
Noma-Afrika Sandlana, manager in the investment providers supervision department at the FSCA, says the regulator has been reviewing the crowdfunding process and looking at the legislation other jurisdictions have put in place.
In the US, for example, companies are restricted to raising a maximum of $1 070 000 over a 12-month period and any shares purchased in a crowdfunding transaction cannot be resold for a year.
The FSCA has not introduced any such restrictions in South Africa as yet.
“It must be clarified that crowdfunding for a charitable cause – for example, for the garage station attendant recently – is not under our scrutiny,” she says.
“We are looking specifically at crowdfunding initiatives such as the one by Beerhouse currently, where potential investors are going to become shareholders and receive a return on their investment.”