CROWDFUNDING Pay piper, call tune
Crowdfunding has gone mainstream. People have used it to raise seed capital for a startup, to fund their studies, to pay for the cost of making art-house films or even to fund the production costs of a book or a song.
Local firm Inbound Sound believes crowdfunding is the solution to bringing music artists to SA, even if the country is not on the radar of the artist.
Launched last month (after an earlier attempt had to be postponed), the online platform lets music fans raise funds that will eventually be used to pay for their favourite local and international act’s performance in SA.
Global crowdfunding mushroomed by 167% to reach the US$16.2bn raised in 2014, up from $6.1bn in 2013, according to a Massolution report. Last year the industry was expecting that to more than double to $34.4bn.
Inbound Sound cofounders Richard Theunissen and Stuart Walsh say their idea to use crowdfunding for concerts was inspired by a campaign in the US. Fans of the rock band Foo Fighters crowdsourced enough money to get the band to perform in Richmond, Virginia in 2014.
Inbound Sound’s website features some of the local and international options. These include Kurt Darren, Crazy White Boy, Jesse Clegg, Ellie Goulding, Guns N’ Roses, Sia and Australia’s 5 Seconds of Summer. Fans can also nominate the artists they would like to see perform. They also select the city where they would like the concert to take place.
The site hasn’t reached a funding goal to hold its first concert yet. Costs will vary. An international artist such as Rihanna will command a higher price than a group like UB40. Locally, the same principle applies when money is raised for a Parlotones concert compared with Elvis Blue, says Theunissen.
Ticket values also vary. A user can pledge up to eight tickets for their concert of choice.
“Each concert has a set ticket cost, so users are pledging towards securing individually priced tickets,” Theunissen says.
The pair of entrepreneurs say their venture will take a percentage of funds raised for successful concerts. “We operate on the basis that no income is generated unless a concert is successfully held. When a concert is confirmed, there’s a percentage taken from the total raised amount which is paid to the concert promoter to bring the artist,” says Walsh.
Subhas Shah, COO of what is probably SA’s most popular crowdfunding site, Thundafund, says this mechanism is gaining acceptance in SA.
Thundafund, which has operated for almost four years, expects to double the amount it raised in the past years. The site has raised R7m for 190 projects. Shah says 70% of projects registered on Thundafund have met their funding targets. If a project fails to reach the required minimum funding amount, the entire amount raised is reimbursed to donors.
“Crowdfunding is an exciting and unique experience. Once more people understand it and the rewards that come with it, they will participate,” says Shah.
An example of a unique project listed on Thundafund is that of a gas solutions company which hopes to raise money to buy a second-hand vehicle. Donors are “rewarded” with the opportunity to spend a day with the owner, while he delivers products to clients.
Jumpstarter Crowdfunding, another local platform that went live early in 2015, has raised more than R218,000, says its chief operations director, Derek Whitehead. Its most successful campaigns have raised funds for a legal battle that a craft brewery in the Cederberg faced; and it helped a band called Gus Brown to fund its debut album, #Fullcollision . Both campaigns exceeded their fundraising goals, Whitehead says.