Although the concept is somewhat new to South Africa, crowdfunding has been around for a while. For many years, people have been willing to invest their money for worthy causes, including disaster relief and political support. The concept is the same today; there are just many more venues that are being scrutinized for alternate funding in this manner.
Venture capital works successfully when enough private investors support and believe in an idea, person, or organization. The reason why crowdfunding in South Africa is gaining popularity now is because of the internet connection of investors. A cause is much easier to publish to the masses through social media networking.
Proven Successful for Many Years
In 1997, the fans of a rock band were able to underwrite a U.S. tour by way of crowdfunding, and this was without the knowledge of the band members. A concerted effort by the principals in any given venture provides a much better opportunity for success through crowdfunding SA, but without experienced leadership results may only meet with limited funding.
Seeking the Right Professionals
Not every investment organization has embraced crowdfunding SA wholeheartedly, preferring the approach of equity based financing. While this may offer some solace to investors, it doesn't necessarily have much bearing on the success of a project or idea. Many business owners at start up have personal investment in the company before outside funding takes place, and some still do not become viable or profitable.
Online investing is one of the most lucrative areas of high growth investment today, and for a reason. For those who are not aware, high growth investment is a relatively new type of investment strategy where you invest in companies that are expected to grow faster than others do for shares or ownership equity. This is often done on a crowdfunding platform such as Startme in South Africa where you have the opportunity to invest in a business or creative idea together with a host of other investors. Not only is this more affordable and the risk is shared among many of you, but its an exciting opportunity to see your money grow. This investment is used for financing the company.
Those who provide equity finances as an investment to high growth companies are called venture capitalists, while those who provide finances to a startup with high expectations of growth are called angel investors. Let us take a closer look at what these investors do.
The role of venture capital and angel investors