The Truth About Running a Crowdfunding Campaign in SA

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In 2017 Uprise.Africa arrived as the new kid on the funding block and was then South Africa’s first equity crowdfunding platform.

The platform came into the spotlight when Drifter Brewing Company, a South African craft beer manufacturer ran a campaign on the platform and made history as the first company to raise R3 million.

From its inception Uprise.Africa’s goal was to enable everyone to invest in startups, not just professional investors.

In the three years since their mission has remained the same.

“Uprise.Africa enables the entrepreneur to reach a broad spectrum of investors who eventually become their customer and brand ambassadors,” says Vivian Hlonyana, marketing manager, Uprise.Africa.

Crowdfunding not only provides an alternative way of raising capital, but it also provides market validation and marketing benefits, says Hlonyana.

“Entrepreneurs using crowdfunding also receive frequent feedback and analysis on their business, growth and expansion plans, by investors carrying out their own due diligence prior to investing, which can be invaluable in a company’s success.

Even with these substantial brand awareness benefits, Hlonyana is quick to caution that equity crowdfunding is “first and foremost about raising capital in exchange for equity, before it is about brand awareness and marketing”.

“As much as these are secondary benefits, they really should not be the aim when doing an equity crowdfunding campaign.”

Hlonyana shares strategies for running a successful crowdfunding campaign, from the story you need to tell, to how much it can actually cost. 

The marketing benefits of a successful Crowdfunding Campaign

What we have picked up is that a crowdfunding campaign has potential to be a marketing tool that increases organic visits to the ventures’s website.

Crowdfunding introduces a venture to the market. By incorporating PR strategies, social media and digital marketing in the campaign, this can provide a way to direct traffic to their website. All this helps the startups to not only attract investors but also acquire customers and raise their brand awareness during the process.

Another benefit is that crowdfunding campaigns are easy to share, this could be via a link on social media or email which makes it easier for investors to spread the word to their connections also contributing towards brand awareness.

We’ve also picked up that a successful crowdfunding campaign is newsworthy, which attracts media attention.

See also: Craft Beer Startup Drifter Brewing Co. Reaches R3 Million Equity Crowdfunding Goal

Drifter image

South African craft beer manufacturer, Drifter Brewing Company, in May 2018, made history as the first company to raise R3 million on the crowdfunding platform Uprise.Africa.

Entrepreneurs will be occupied for three to four months during the process of equity crowdfunding

How to prepare for a Crowdfunding Campaign in South Africa

  • The story

The most important element of the whole campaign is the story (video and a written proposal). This is where a connection is fostered with a potential investor beyond the feasibility of the business.

Entrepreneurs should spend some time working out the ideal story for the crowd investor. It is advisable to rope in seasoned professionals in particular for the video, but also for the “sales copy” that will go along with it.

In some cases, entrepreneurs could benefit from roping in a strategist to help work out the ideal approach for the business.

  • The resources needed

Fundraising is a critical activity for any growing business, thus it needs to be allocated the necessary time and resources just like any other key activity.

The CEO/Founder is the key person when it comes to fundraising, and he/she needs to ensure that they have sufficient runway to cover the fundraising period, and they need to arrange things in the business such that they are able to dedicate some time to fundraising without compromising operations.

Entrepreneurs will be occupied for three to four months during the process of equity crowdfunding, which they need to be well prepared for.

  • The media tour

A successful crowdfunding campaign is newsworthy, which attracts media attention. So businesses need to be prepared to do lots of interviews with the media (television, radio or newspapers, business magazines). And to reach its funding goal.

  • The team

Crowdfunding requires a lot of hands-on work to get ready and get the word out there. So business will need a dedicated team. They also need to put aside a budget for marketing push to convince the existing audiences to invest and to extend news of it to a new, wider audience.

An effective Facebook ad campaign is ideal as it allows a company to effectively target likely investors based on Facebook users’ location, demographics and interests

  • The budget

A marketing budget for R30,000 – R80 000 to cover extensive PR, digital and social media marketing, and even access to deals on paid-for out-of-home advertising. All this helps the startups to not only attract investors but also acquire customers and raise their brand awareness during the process.

  • The strategy

A well-put marketing strategy with realistic goals and tactics is essential. Once the business start gathering the crowd, they need to ensure regular updates on website and ensure online presence on digital platforms.

  • The private phase

During the private phase (hidden phase), businesses needs to ensure that they gather the crowd by making regular calls, emails and meetings within their network to be able to reach a seasonable amount before going public.

Once an equity crowdfunding project goes public and these early guarantees of investment appear to fly in so quickly it gives vital confidence to other members of the crowd who may have never even heard of the company.

  • The public phase

Once the campaign is in a public phase – businesses needs to build on momentum. Early momentum is crucial in any crowdfunding campaign. An effective Facebook ad campaign is ideal as it allows a company to effectively target likely investors based on Facebook users’ location, demographics and interests.

We also recommend email marketing as it provides the best opportunities to build relationships and drive sales. Businesses can talk about the story’s on the company’s growth plans also regular update on campaign progress.

So digital marketing is quite essential. Working with the right professionals with the correct strategy and knowing who to target is the key to success.

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Lebohang Thulo
Lebohang Thulo
Lebohang Thulo is the editor of SME South Africa. She enjoys keeping up with the country’s exciting and fast developing entrepreneurship ecosystem. You can find her at @lelele3