Crowd-funding ventures offer respite for young entrepreneurs
By Silvia Wakhisi | May 12th 2015
For aspiring young entrepreneurs, getting capital to set up their dream business is a great challenge.
However, a new concept that seeks to offer an alternative source of startup capital has come in handy for those who want to venture into business.
Crowdfunding, what would locally be referred to as online harambee, is now being seen as the solution for upcoming entrepreneurs.
Last October saw Nailab, one of Kenya’s leading business incubators, in partnership with the 1% Cent Club - a Netherlands based crowdfunding venture - launched a two-day bootcamp dubbed “The Cheetah Fund”. This is a matching fund of about Sh5 million for African pioneers who want to start or boost their world-changing ideas.
The bootcamp rallied young entrepreneurs to consider crowdfunding as a key alternative source of startup capital. They offered an incentive funding of 70 per cent of the total target amount if the startups are able to raise the first 30 per cent on their own in 30 days.
Kenneth Okwaroh, 30, is among those who benefited from the bootcamp. Mr Okwaroh submitted his project “Give Okwaroh a Book” which needed a boost of Sh900,000 and 10,000 books to enable the construction of a library in Muhoroni Constituency, Kisumu County. This was to help students with their after-school and recreational study.
Through the Cheetah Fund campaign, he was able to raise Sh690,000 and acquire 4,000 books. The library structure is now up. “The Cheetah Fund crowdfunding opportunity provided a unique break to collect debt-free startup capital in such a short time frame which was efficient and came in handy for us and the community,” said Okwaroh.
“This has helped us increase engagement with both the benefactors and financial sponsors of the project and kept them accountable to ensure that the project takes off,” he added.
Matching the 30 per cent self-raised funds proved to be a good incentive for the pioneers to invest more time and effort into their crowdfunding campaigns.
Founder and Cladlight Chief Executive Charles Muchene received Sh1.1 million from the Cheetah Fund, which went into production for the commercial circuit for his smart jacket solution. “The Cheetah Fund helped us run fast in the making of the smart jacket circuit without which we will still be trying to raise funds to get started. Our dream of keeping motorcyclists safer by increasing their visibility on our roads is a reality,” said Muchene.
The Fund was launched in 21 countries across Africa. Of 177, Kenya provided more than half the entries - 91 - from which 29 startups were able to reach their 30 per cent target.
“It is clear that crowdfunding is key in raising debt-free and equity-free startup capital. That is the beauty of this concept and Nailab is a great example of a crowd-funded initiative that has taken off and is now supporting entrepreneurs to start their businesses,” said Nailab Chief Executive Sam Gichuru.
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