PushandStart, a new equity and debt-based crowdfunding platform opening to the public in the second quarter of 2014 aims to connect visionary innovators with early adopters who aren’t scared to be the first to trial a new product or service in a bid to show users that they too can become investors without breaking the bank.
Founded in 2013 by Nwachukwu Onyeaso, Ejike Okwor, Ernest Umeike, and Ify Onyeaso, PushandStart founders were inspired by failure and decided to showcase aspiring or bootstrapped founders to the world to raise funding and build their businesses. At the moment, the platform is targeting Nigeria and Ghana but has plans to expand across Africa.
Nwachukwu Onyeaso, co-founder, PushandStart told TechMoran, “We help VCs and angels passively generate high quality deal flow. By creating our own labour market, we provide people from all walks of life with the tools and a platform to monetise their skills and collaborate with some of the continent’s brightest and most promising startups.”
“We make it possible for experienced professionals and entrepreneurs to interact with relative newbie founders, mentoring them and enriching the ecosystem with knowledge that may otherwise have just faded away. As a crowdfunding platform, we also realise we’re in prime position to enthrone the precepts of Lean Startup by generating data for the Learn-Build-Measure loop. Simply put, if your campaign does not do well, you need to work on some aspect of your project,” Nwachukwu Onyeaso added.
“These are folks who have awesome ideas but are hamstrung by inadequate funding. People who don’t know any VCs or angels and their FFF (friends, family and fools) funding round can barely get them started,” says Nwachukwu.
Starting and sustaining a business on the continent is a tough job, something two of the founders of Pushandstart.com found out the hard way when they were made redundant by their banks during the global recession circa 2008.
The team tried their hands at numerous things, – public speaking, trading, hospitality businesses, a SaaS startup, teaching, financial services and almost everything but just became the quintessential Jack of all trades. Though some of these gigs put food on the table, they realized they were simply masquerading as businesses when in fact they were time-and-money sinks, sucking but never giving anything in return.
Then sometime in 2013, the scales finally fell off their eyes and they figured other people would be having a rough time hacking businesses too. They then started interviewing other founders and their personal friends and what they found reinforced their belief that a platform where founders can come to freely share insights would be a winner.
They thought of a crowdsourced repository of entrepreneurial wisdom created by actual African entrepreneurs. Then later the crowdfunding bit and all the other features were layered in based on user feedback.
“It’s really interesting to note that once they decided to bundle in crowdfunding, user interest mushroomed, strongly suggesting that they were now addressing a major pain point, says Nwachukwu.
The inability by banks to loosen the purse strings and make funds available to fledgling businesses, a major reason why they cannot do much for startups led to them starting a crowdfunidng platform. Banks aren’t business angels or venture capitalists but custodians of depositors’ funds and must invest the funds and minimise the likelihood of loss unlike startup funding which has inherent risks.
Many startups ideas die a stillbirth, never to be enjoyed by the world. Much noise has been made of the new emerging middle class and how they are going to lift the continent out of poverty but Nwachukwu thinks the shifts will only happen if those who have the acuity to escape poverty are given the enabling environment and tools required to do so and business funding is a very necessary component in that mix.
According to Steve Case in a recent report by Infodev, it may be possible for developing nations to use this new funding mechanism as a means to spur domestic innovation and create a larger number of high-growth entrepreneurs.
“Crowdfunding may have the potential to help catalyse existing efforts to create entrepreneurial cultures and ecosystems in developing nations,” Case said in the report. The four therefore want to be part of making that happen. The report adds that there are up to 344 million households in the developing world able to make small crowdfund investments in community businesses.
They are also encouraged by Kickstarter which has raised over $480m from 3 million contributors. They also say the market potential in sub-Saharan Africa, estimated at $2.5bn is big as Africans are naturally community-minded people. Social media has also cemented that community feel.
The platform works simply.
With a new business idea, one signs up for an account on the site, build a business profile by crafting an elevator pitch for investors, completing a business model canvas or lean canvas and then determining how much money you require and how you want it structured, either as a loan or as an equity investment. If a user wants a loan, they indicate how much they can afford to pay back and for how long, say like $1,000 at 3% per month for 24 months.
The founders say they will also assign an index number based on the risk involved for potential investors, for example an additional 2.2% per month. If any investors like a users terms, they will contribute funds. If not they won’t and a user will have to modify them like an auction.
If a user wants to raise equity investment, he or she will need to value their company or business idea and based on that valuation, they’ will decide how much equity they are giving out to investors, then pick a mentor for advise, hire an accountant and start the campaign. Investors donate via major cards such as MasterCard and Visa and PayPal.
Set to earn from commissions on the funds raised and for every job completed via Pushandstart.com, the team risks competition from firms such as JumpStartAfrica, Kowric, 1pagePlan, SliceBiz and PitchOffice even though their models are not entirely similar.
The four are not seeking any external funding and do not expect to do so in the near term but want to help entrepreneurs in cutting the cost of doing business, accessing market access and giving them more industry knowledge and funding.
“Ideas are essentially worthless until you get them out of your head and execute on them,” Nwachukwu says. “However, you should spare a moment to carefully consider. I rarely espouse nebulous qualities like passion with respect to starting a business, rather I think you need to have a dogged determination and staying power to bring your dream to fruition.”
Pushandstart.com expect to be live in 20 African countries in five years and to have crossed the $1bn mark in funds raised for startups also.