Investor turns to online crowd for expansion funds

Crowd financing is one of the new ways start-ups can raise funds or students can collect school fees from across the world. Right, Ms Priscilla Thuku with son at home. Photo/Suleiman Mbatiah 

By Chebet Caroline

Posted  Wednesday, April 10  2013 at  16:59

IN SUMMARY

• Nakuru business woman sees crowd funding replacing the laborious collections among friends, relatives.

When Priscilla Thuku sold a parcel of land 10 years ago, she thought, as per her targets, the money would be enough to put up an ICT centre in Nakuru County.

She did but soon realised the cash was a drop in the ocean when Tennessee Institute of Technology admitted its first students. Top of the list was money for building hostels for learners who came from outside Elburgon, which she had mapped out as the school’s catchment area.

Until last month, Ms Thuku, the director of Tennessee, was soliciting funds from well-wishers within her neighbourhood when a friend introduced her to a means of raising money online to attract a wider audience.

Crowd funding allows entrepreneurs to post their project proposals online and those interested in funding the project can contribute using a credit card. It was through this technique that investors like Ms Thuku broke the yoke of financial burden and has since realised their lifelong dreams.

She had a target of Sh2 million for her project, but says the response online has been overwhelming where large donors have sent Sh600,000 in the past one month.

“It is a success. Online fund-raising is attracting even larger audiences than the local harambees,” she said during the interview.

Crowd financing, which is collection of cash from a network of friends or possible business partners, is proving cost-effective because one does not print guest invitation cards or require a gathering as is the tradition.

During the launch of her financing campaign, Ms Thuku posted her project details online and set her target with the help of a friend Jay Larson.

Crowd funding is emerging one of the most specialised grant application methods commonly used in the United States. Mr Larson, the founder of Tunapanda, a US-based non-governmental organisation aiming at giving free networking to the students and free hardware installation in Kenya, says an investor can use crowd funds, whose services are only charged when the project raises targeted funds.

“This is a platform which helps people to solve their problems easily without spending money in organising fund-raising events; one has to post a project to a large group and potential investors”, he says.

While attributing the success of the project to online fund-raising which he started two years ago with his brother Mick Larson, he said most Kenyans however are not aware of the concept.

Successful sourcing for funds online requires building a network and meeting a wide range of investors online.

One of the ways of telling the project stories is the use of pictures or a video with easy-to-understand descriptions with a possibility of winning the hearts of more donors. One also has to set a deadline for which the fundraising will run online.

Some of the online platforms that have dramatic success are Kickstarter, indiegogo, GoFundMe, Razoo, Crowdrise, Pledgemusic, Sellaband, appbackr and Crowdfunder. Donations are made via credit cards.

Mr Larson said the use of such platforms in Kenya is still a major challenge partly due to limited Internet access while others have not heard about it.“Mobile money transfer is the most popular way of transacting in Kenya and that is why most people are either unaware of online transactions or do not have access to Internet or are not acquainted to the Internet” Mr Larson said.

However, he said that for the Kenyans to donate towards projects like Ms Priscilla’s, she said that including a mobile number is necessary. He urges many upcoming entrepreneurs and students in need of help to source for funds including fees online.

Mr Larson added that Kenyans should be sensitized in benefits of using crowd funding as a way to empower their projects and realize their dreams.

“We can only bring equality to the world and solve our problems by pooling and financing projects and talents which could have been wasted. It is only through the Internet that we can mobilize the world,” he said
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