Crowd-funding platform helps small businesses attract funds and investors
Uprise Africa, an equity crowd-funding platform, gives small businesses an opportunity to look for alternative ways of getting funding and attracting investors.
The idea to start the crowd-funding campaign for businesses came about when Tabassum Qadir, Uprise Africa’s chief executive, was struggling to raise funding to start her own business through traditional methods.
“When I could not access funding for my dream venture of an airline, I started looking at alternative funding options. And that’s when I came to know about the concept of crowd funding in the UK and USA,” said Qadir.
Uprise Africa helps small businesses to raise capital for their businesses and “provides them with new investment options”.
The company, according to Qadir, “equips” entrepreneurs to raise between R3m and R150m in exchange for equity shares.
Recently the company helped raise R34m for Intergrateme, a business that describes itself as a “platform that provides users with a secure, simple and effective way to share personal information with anyone”.
“Uprise Africa is the equity crowd-funding platform for South African businesses. The platform works with entrepreneurs to raise capital for their businesses and allows investors to invest capital into South African businesses in exchange for equity shares,” Qadir said.
According to Qadir, crowd funding is becoming a popular phenomenon in South Africa, not only as a platform for businesses to raise capital but for people in need.
Nkosikho Mbele, a Cape Town petrol attendant who had paid R100 out of his own pocket to top up the tank of a motorist who stopped for fuel, but had forgotten her bank card while driving to Cape Town, received more than R400,000 through a crowd-funding campaign last month.
According to Qadir currently South African entrepreneurs have to look to traditional funding models like bank loans, venture capital, private equity and government grants to access the funding they need for their business.
The difference between traditional funding and crowd funding, Qadir says, is that the latter “democratises” start-up financing by allowing many more people to own equity; giving a broader spectrum of South Africans the opportunity to invest in small and medium-sized enterprises (SMEs).
“The platform enables trust to be built between investors and entrepreneurs and in doing so creates a supportive business ecosystem,” Qadir said.
For a company to qualify for equity crowd funding, it has to be already generating revenue, be operational for at least two years and be free from litigation, Qadir said.
From the proceeds of each crowd-funding campaign, Uprise Africa makes between 5-8% commission, but only on successful capital raised.
“This includes the management fee to ensure legal compliance and judicial oversight for the first year after raising funds,” Qadir explained.