Yet another proponent of alternative funding has emerged, as StartMe, an internet-based funding portal, has been launched.

The site, which is the brainchild of South African entrepreneurs Ben Botes and Lourie Nel, allows a number of small investors to network and pool resources to finance projects, businesses and other ventures.

“While South Africa has an abundant supply of finance, accessing it can be cumbersome and challenging, particularly for the budding entrepreneur,” explained Botes. This exacerbates the fact that the biggest issue facing entrepreneurs today is funding their ideas to fruition.

Additionally, approaching banks requires that the entrepreneur follows certain eligibility criteria such as credit worthiness.

“This can lead to delays in getting the business off the ground and the potential of losing first-mover advantage,” he added.

Starting the entrepreneurial fire

However, Botes believes that StartMe addresses these concerns. He asserted that with StartMe, the entrepreneur can raise moneyfrom the crowd  in just a few months to start or expand their business.

Nel added that StartMe enables potential investors to fund ideas “according to their pocket”.

He explained that interested investors can browse through the projects on the site (www.startme.co.za), and when they find a project or projects that they are interested in, they can then purchase investment credits.

These credits are then awarded to the various projects that these investors indicate they want to support. “Once the project comes to fruition, the funder is then rewarded in the form of gifts, complimentary products or shares, depending on the value of the investment,” he continued.

Is it crowded in here?

The crowdfunding concept, which entails raising small monetary stakes from a large group of investors, particularly through online communities and social networks, derives from ‘crowdsourcing’, whereby organisations ask the public, usually via the internet, to do jobs typically done by their employees.

The trend though, is hardly a ‘flash in the pan’ or a temporary fad. According to Botes, the crowdfunding concept has taken the venture capital market by storm, with TIME magazine describing it as ‘one part social networking and one part capital accumulation’.

National priority

According to Crowdsourcing.org, the emergence of crowdfunding platforms (CFPs) around the globe is accelerating. By the end of 2012 there are expected to be more than 530 platforms, up 60% since last year.

The duo believe that, for South Africa, StartMe provides the opportunity for economic growth. They pointed out that it has long been accepted that employment, and subsequent economic growth, will be created through small, medium and micro enterprises (SMMEs).

Nor is it a secret that, given South Africa’s high levels of unemployment, job creation is a national priority.

To the point

However, Botes and Nel stressed that in order to create SMMEs, entrepreneurs are needed; equally important is that these entrepreneurs need money to get their businesses up and running.

“StartMe is the ideal platform for budding entrepreneurs to find both the capital and the mentors to get their ideas off the ground and their foot into the business world,” asserted Nel.

“Not only will this stimulate growth in the South African economy, but the downstream knock-on effects in terms of job creation are huge,” he concluded.