Crowdfunding in South Africa is in its infancy, but as start-up businesses seek to access non-traditional pools of finance, emerging Fintech companies are forced to provide more inclusive platforms to financial customers while the Regulator is engaging with industry to enable this new form of finance. Below are some of the highlights from the session:
- The three faces of crowdfunding are:
- The people or organisations that propose the ideas and/or projects to be funded,
- The people/investors who support the proposals.
- And the platform where the funder/investor and the creator/campaigner meet.
- Crowdfunding is a win-win for all 3
- The prospects of crowdfunding in South Africa:
- SA has a bright future with crowdfunding. Outside of the formal and regulated institutions or platforms, we have stokvels, a form of crowdfunding that rotates between members. Which shows an understanding of the workings of crowdfunding in its most basic form
- The advancement and usage of technology is resulting in a crowd economy, which makes for easier access to funding due to fewer regulations
- The pitfalls of crowdfunding in South Africa:
- While there are good things about crowdfunding, deleting the registration thresholds under the National Credit Act, 2005 killed the peer-to-peer lending market in South Africa, as it effectively means any person who wishes to make a once-off loan to another person may potentially have to register as a credit provider and comply with the full provisions of the Act.
- Despite the good prospects, there are funding gaps in the market and groups such as activists, the arts and some entrepreneurs are in dire need of funding.
We will be uploading the recording to our YouTube channel, stay tuned