Net result: not much
Sourcing funding from donors through the Internet has been slow to take off in SA
hen Ksenia Mardina needed funds to start her online magazine Gummie (which later morphed into an adventure travel site), she was reluctant to get into debt or approach family and friends directly for help.
At the time, she had just moved to Johannesburg from Moscow and was struck by the absence of online guides for residents and visitors that listed fun activities in the city.
Sensing an opportunity in 2012, she decided to create a site of her own. Instead of approaching a bank for a loan, she went to crowdsourcing website Kickstarter to raise the funding. Though there is nothing new in getting members of the public to back a new venture, the concept of crowdsourcing — using an Internet platform to raise funds — has taken off in the past few years.
With Kickstarter and similar sites, a project gets funding in exchange for tiered levels of rewards. A person pledging US$5 would have received a personalised digital postcard and a “Warm African Thank You” on Gummie’s Facebook page. A $1 500 pledge would have earned the benefactor a personalised video tour
Wof Gummie’s favourite places in Johannesburg, as well as a tote bag, a T-shirt and a button. For its part, Kickstarter gets a 10% commission, but only if the client reaches the funding goal. Mardina’s was $9 000.
However, she managed to raise only about $6 000 through the site. This would have meant that Kickstarter would have returned what she had raised. It pays out funds only if its fundraisers reach their funding goal.
But a friend suggested that Mardina make a $3 000 pledge herself. This way, she was able to gain access to the $6 000 that was already committed — which was enough to start Gummie.
Despite her success, Mardina is still an outlier, in SA terms, in using crowdsourcing to raise funds to start a project.
Local crowdsourcing platform Thundafund has raised about R5,2m for 144 projects since 2013. But this a drop in the ocean compared to the $2bn that Kickstarter has generated for its 94 076 projects since 2009.
Thundafund COO Subhas Shah says crowdsourcing is struggling to get traction because not enough people — 9m out of a population of about 50m — use the Internet in SA. Many of those who do use it are not yet comfortable transacting online.
There is also a misunderstanding about the kind of funding it can raise. A project to raise money to develop a laser razor, for instance, brought in $4m through Indiegogo. This kind of success leads many to assume that there is money waiting to be thrown at them. Not so, says Jumpstarter founder Derek Whitehead. “Money does not magically pour in.”
Whitehead says many people don’t realise crowdsourcing is as much a marketing exercise as it is a funding one. If the people