It all started when you had that great idea for a new product or service. You’ve been working on your idea for quite some time as a side hustle, invested all your savings, and prepared a business plan. Now, it’s time to raise capital to bring this idea to life. You don’t have to borrow from friends or the bank; there are other options available; one of them is crowdfunding.
What is crowdfunding?
Crowdfunding is a method of raising finance for a new business venture by collecting small amounts of capital from a large number of individuals. These platforms bring investors and entrepreneurs together and expand the pool of investors beyond the traditional network of owners, relatives and VCs.
What are the main types of crowdfunding
Supporters or backers in donation crowdfunding do not expect anything in return for their contributions. This type is best suited for non-profits and philanthropic causes.
This type involves supporters receiving products or services in return for their contributions. It can be a good choice for businesses with something exciting to offer the public and entrepreneurs seeking to raise money and stay out of debt.
Equity crowdfunding involves selling off a percentage share of the business to a crowd of investors. This type is best suited for companies with exponential growth potential, but lacking a singular product or experience that could provoke viral enthusiasm.
Debt-based crowdfunding or peer-to-peer lending:
Business owners borrow money from the crowd at a specific interest rate and pay them back over an agreed period. It is a good option if your company has a defined need for money, and a strategy for what to do with raised funds, as well as a plan to pay it back.
Crowdfunding Platforms in Egypt:
The platform operates as a closed network of investors to ensure the seriousness and reliability of investors in the MENA region where crowdfunding is relatively new. Investors join Shekra’s network based on recommendations made by existing members.
How to apply for crowdfunding?
- Complete an online registration form
- Shekra’s team and a network of external consultants will evaluate your startup and give it an appropriate score. The scoring criteria include:
- Clarity of purpose
- Market potential and reach
- Startup stage
- Current investors \ previous incubators
- Business model
- Fair valuation
- Team structure, track record, experience and capabilities.
- If the startup passes the screening process, you will sign an entrepreneur agreement with the platform to protect your ideas and intellectual properties.
- A crash course covering basic business training is provided to prepare you for promoting your business to investors.
- Once the startup is ready for the crowd, Shekra will post it on the portal and promote it on social media.
- Funding is considered complete when the target fund is completely attained within the specified timeline.
Video: Shekra Crowdfunding
A crowd-solving platform for industrial, environmental, and societal challenges. Yomken collaborates with people with brilliant ideas for innovative products who are looking for financial, collaboration, or marketing support for their ideas.
The platform offers two main services:
- Open-innovation platform: dedicated to low-tech micro and small enterprises (MSEs) or NGOs where they can post the challenges they face and get access to creative solutions provided by wisdom of the crowd.
- Marketplace: where innovators and creative individuals post their projects, patents and market researches to get in touch with VCs, crowdfunding platforms and others for support and investment.
How the process goes?
- If you have a project facing technical or product problems, submit it as a challenge on the website and have everyone participate to help you through.
- If your product is facing marketing or funding challenges, submit it as an innovation on the platform and get in touch with potential funders and collaborators.
- After submitting your challenge or innovation, the team examines and studies your application.
- The team will usually contact you within 5 working days to inform you of the following steps.
Video: Yomken – The social open innovation and crowdfunding platform
An online crowd-funding platform that helps connect donors with sustainable development projects serving children, women, environment, health, education, and poverty. The mission is to support Egypt’s sustainable development by directing donations towards sustainable development causes with long-term impact.
How the process goes?
- Any organization established under Egyptian law 84\2002 is eligible to apply by filling out an online application form.
- The team conducts a field visit to the organization to validate the project.
- If the project meets the selection criteria, a service agreement is signed to add the project on the platform.
- All funds raised are sent to the organization with an online record displaying all completed donation requests.
- Once the fundraising is complete, the project is showcased as successfully funded.
Video: How Madad works