From left, Sitawa Wafula who secured funds to host 20 mental health events bringing 450 people across Kenya and Charles Muchene, founder of Cladlight, who raised Sh1.1m to develop the first 500 smartjackets for motorcyclists. PHOTOS | FILE |
What you need to know:
The concept of pooling funds from many people, especially on the Internet, has a footprint in Kenya where start-ups have raised funds on meeting set targets that test the popularity of an idea.
It’s new but crowdfunding is becoming a trend across the world and now in Kenya.
The concept of pooling funds from many people, especially on the Internet, has a footprint in Kenya where start-ups, the bulk of them targeting the youth, have raised funds on meeting set targets that test the popularity of an idea.
Going online to ‘beg’ for funds is increasingly becoming popular and may be getting attention thanks to the traditional hurdles set before ventures or projects that are just leaving the starting blocks and are “don’t-touch” businesses among financial institutions.
Some crowdfunding sites are all-or-nothing, meaning that if an individual seeks to raise Sh100,000 by the end of their campaign but miss this target, the money collected is returned to the project’s backers.
Other funds especially those that are backed by angel investors require the start-ups raise a certain percentage of the funds on their own within a given time.
Dutch-based venture 1%Club set up Cheetah Fund to provide unique projects within Africa with a way of remaining sustainable by raising funds through their platform.
Projects that raise 30 per cent of the target via the platform within 30 days secure the rest of their seed money from the Cheetah. The Sh43 million (€400,000) fund is supported by the Dutch National Postcode Lottery.
Bulk of projects
In Kenya, the fund partnered with local accelerator programme Nailab to ensure that there was more activity within the start-up community.
Last year, the fund was launched in 21 countries across Africa and received 177 entries. Of the 109 projects accepted and started online, 75 have successfully been funded; the rest did not pass muster.
According to Nailab chief executive officer Sam Gichuru, Kenya provided the bulk of entries with 91 start-ups seeking money to either kick-start their business or expand. Of these, only 29 reached the 30 per cent threshold within a month to secure required capital from Cheetah Fund.
“Crowdfunding is a key means of raising debt-free and equity-free start-up capital. More start-ups are adapting to the idea of the online Harambee by angel investors since it does not cripple a business with debt funding at the early stages,” Mr Gichuru said.
Kenyan blogger and mental health activist Sitawa Wafula is among those who have raised funds through the platform. Ms Wafula who was among the five winners of the Google Africa competition Africa Connected, was able to add to her Sh2.1 million award the cash she sought to build a resource centre for her pet health project.
She wanted to establish Mental Health Chillouts events, which would also serve as clinics, across the country. From her successful funding, she will host 20 such events where 450 Kenyans will talk and learn about mental health.
In a given year, about 30 per cent of the population across the world is affected by a mental disorder and over two thirds of the cases do not receive the care they need. More than 80 per cent of people suffering from mental disorders like epilepsy, schizophrenia and depression live in developing countries.
Musician Juliani also set up an online project to source for funds to ‘rebrand’ Dandora Estate in Nairobi, which is famous for its garbage landfill into a hiphop city in the next three to five years.
Juliani wants to build a school where resident youth can learn not just the art of writing music but also delivery and packaging of their productions. With the funds he raised through the Dandora HipHop City project, 1,000 youth are expected to benefit.
Suraj Gudka, the founder of Sokotext, a social enterprise start-up that seeks to provide a steady supply of fresh food and vegetables to the low-income neighbourhoods of Nairobi, successfully sought capital on the Cheetah.
Instead of individual grocers or ‘mama mbogas’ going to the market everyday, the start-up seeks to receive orders from many traders and supply them with quality produce at affordable prices.
Fresh produce
He is targeting 100 women to get daily stocks of fresh kale produce. In Nairobi, the traders travel from far and wide to the Wakulima Market within the city centre, where they get their daily stocks as early as 3am.
CladLight, a finalist project in the Business Daily’s The Next Big Thing, has also benefited from the online harambees. Using funds from family and friends Charles Muchene, his elder brother Joseph and Michael Gathogo are fronting a reflector jacket for both boda bodas and their passengers.
The wears have light-emitting diodes (LEDs) at the back that are connected to the motorcycle’s indicator system. CladLight targets visibility on the road at a time many motorycle taxi accidents have become a national concern.
The start-up received Sh1 million from the fund that will enable them to produce the first 500 smartjackets. Official data from the National Transport and Safety Authority show that of the 2,907 lives lost in 2014 on the roads, 391 motorcyclists died.
“Capital has always been an issue with us since we are more of a manufacturing start-up than being service-industry related. The money we raised is proof that people believe in our idea and want to see it to fruition,” he said.
Other startups that also got funded include TotoHealth, which focuses on sending targeted health care information via text to improve maternal and child health in remote parts of Kenya.
PadHeaven is the producer of organic sanitary towels with a goal of increasing access to education while Kejahunt which provides young people with affordable housing solutions.
