SA Crowdfunding Blog

As crowdfunding is evolving into a real opportunity for entrepreneurs to get their businesses of the ground and we are seeing an enormous amount of interest from both the media as well as entrepreneurs themselves, crowdfunding certainly has not been without its criticism.

Interesting then that a recent study by South African crowdfunding platform StartMe have found a much more clearer picture of what leads to crowdfunding success. What seems to be particularly important for would-be recipients of crowdfunding is for them to understand social media and the way social-technology users think. We must not forget that crowdfunding in itself is very much a technology based solution, so those involved are inherently driven by and accessible through technology. Today of course know that a key part of technology and how we use it to communicate is related to social media.

First, crowdfunders seem to understand the high risk of putting money into a new idea, the survey shows. They're well aware that most small businesses fail. As a result, they spread their investments. Moreover, many take due-diligence seriously, and they limit their investments to amounts they can afford to lose. In other words, they may be inexperienced, but they're not stupid.

Second, what seems to be happening is that the "social media culture," in which people feel close to and want to be part of brands they like, is extending into social investing. StartMe cofounder Ben Botes says two-thirds of investors surveyed expressed the need to feel some emotional connection with a target company. People are investing into ideas that mean something to them.
Published in SA Crowd Funding Blog

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