We talk to Ben Botes, co-founder of StartMe, the fresh South African crowdfunding platform. The South African version of Kickstarter was a natural step for Ben, who’s main interest lies in investment networks and entrepreneurial ideas. Ben is also the author of ‘Release Your Inner Entrepreneur‘. We find out what the benefits of this startup platform are, and we also hear his interesting predictions for crowdfunding in 2013.
Describe the StartMe project, and who it is targeted at.
The crowdfundng company was started specifically for the South African market. It aims to mainly target entrepreneurs and creatives. It includes entrepreneur projects, music projects, and film and art related projects. There is a good mix.
How does it differ from Kickstarter?
Well, the specific focus of StartMe is on the South African market and South African entrepreneurs. Kickstarter only accepts UK and USA projects, besides for a few exceptions. The idea is to have a South African following. That’s the main difference. But yes, Kickstarter are our biggest competitors.
Does it offer any mentoring?
We do offer mentoring , on an ongoing basis. We assist with creation and we advise the projects on what incentives they should offer investors . We help startups with setting goals, and we merge our own marketing and support with theirs. We also help out through social media.
Do projects need to acquire the full amount requested in order to get the funding pledged?
There are two options available on the site. If the project receives 100% or more of the funding, it is paid out and we request 5% commission for that. If the campaign has ended without reaching the full amount, the startup can request a pay out, provided they’ve received at least 50% of the full amount. We then request 8% commission. Larger goal amounts aren’t always reached, so we know that companies can still use the partial funding later on, when they are able to complete the funding somewhere else.
Can a project be re-added after a failed attempt?
Yes it can be. We allow for a second phase. Companies cannot extend their project, but they can add it again. There is no limitation as to how many times you can add a project. But truthfully, customers become unconvinced on the viability after the first attempt. So a second attempt is usually less successful.
Are most investors local or international?
Both. Initially it is more local, but as projects and the people behind them start to target their own networks, they usually get interest from overseas. Last week we also added the PayPal option to facilitate that element. Going forward, we are hoping that there is motivation for the South African community to contribute back into their community.
What kind of success have the projects on StartMe seen?
So far we have seen five successful projects. And a few more are coming close to successfully finishing. Our site has been up for 6 months now, so on average we have one successful project a month. This is really good for the early stages of a startup.
How active is the SmartMe site?
During the week we receive about 200-500 unique visits a day. The weekends are obviously quieter.
In your opinion, why is crowdfunding favourable over other forms of investment?
Well that is not necessarily the case, it is just another option. Some projects only use this method, and others use it as a support to their other financial streams in terms of startup phase funding. The financial element to crowdfunding is only one. The benefits of this method is that it is a great way to introduce your idea into the market. Even if it is not successful, the project can create customer awareness by people seeing it. So there are a range of benefits, the most important being that existing customers can get excited about your products.
How do you see crowdfunding changing or evolving in 2013?
There are a number of niche orientated projects happening, especially globally. Things like eco-friendly projects or even parents wanting to put their children through education, via crowdfunding.
The US has proposed a job act which involved equity funding. Company can now sell shares of the company through crowdfunding. The approach will be key going forward in South Africa.