With one of the recent projects on StartMe coming from a story writer, its useful to remember the variety of entrepreneurs we get here. Crowd funding can be applied to almost any venture, and the arts are a prime area of need for business finance options. Funding for film-makers is not a new idea by any means, but it hasn't been used in South Africa that much. In June of 2011, Tyron Janse van Vuuren and others began a crowdfunding effort to raise R100,000 for a three-minute video that would raise awareness for the movie script he had written.
"Shady Valley" is one of the first funding for film-makers attempts in South Africa. The comedy-horror spoof concerns a teen who kills phony demons with his own version of karate. The crowdfunding effort received the capital necessary for the promotional video, making the next test the funding for film-makers necessary to make the film itself.
Investor Funding is Nothing New
Producers have been playing the part of crowdfunding for many years, but using the internet to reach the smaller investor is a relatively new way to finance film. A well-known producer or director can attract investments from both personal and business perspectives, and name recognition also entices the large movie studios to get on board, but the first time film-maker has a difficult time receiving any attention.
A cattle farmer in Southern Limpopo utilizes crowdfunding to aid in pre-selling his beef. He has found it to be a way to re-grow his herd after the mad cow epidemic. This is just one indicator why business finance is morphing from the old ways to more creative ones.
At one time, crowdfunding was simply a vehicle for movie makers or artists to fund their projects, and then as if a revelation occurred, the trend caught on and many others began to seek project funding in this way.
A positive result to come from global economic woes is the general understanding that banks aren't as powerful as people once thought they were. Many big names in finance are no more, and it is evident that changes in banking have only made it more difficult to arrange loans with the remaining institutions.
Business finance through banks has always operated under the concept that the person with money was the only one who could borrow money. There was a phase when the lenders were more lenient with credit and looked the other way regarding some business finance situations that were questionable. Those days are in the past and it is unlikely that they will return.
Is Peer to Peer Lending the Future of Business Finance? Just over six years ago, peer to peer lending became legal in the United States, and other nations followed suit in short order. While this sounds a bit like computers talking to each other, it is actually a way for many people to side step the banks for funding.
As with any new lending or investing venue, there were growing pains that caused different results than those that were expected.
What Attracted Lenders
Peer to peer lending is a simple concept that involves the use of other people's money by those needing to establish a loan. The reason it was attractive in the first place was the return on the money loaned was substantially better than could be expected from a savings account or investment of funds in stocks.
Companies that sprung up to be the caretakers of this funding promised to be the watchdogs, do the credit checks, and make peer to peer lending safe for those who chose to invest or save in it. In the early phases, things did not work out well through some of these companies.