Crowdfunding to boost aspiring SL entrepreneurs
While on the one hand new innovations are emerging with technology development and new ideas flowing into the mind of an aspiring entrepreneur, financial stability on the other hand plays a key role in executing the developed product.
Backed by an experienced consortium of founders, online platform ‘Crowdisland’ was launched last week at the Cinnamon Grand in Colombo, aiming to bring together talented entrepreneurs and quality investors to make crowdfunding a reality for Sri Lankan start-ups and SMEs.
Orion Management Consortium CEO Jeevan Gnanam, key founder of Crowdisland, at the launch commented, “Crowdfunding is widely known as the practice of funding projects or ventures by raising small monetary contributions from a large number of people. The concept is a form of alternative finance which has emerged outside the traditional financial systems. Sri Lanka is witnessing a strong start-up culture that is sowing the seeds of innovation-driven growth for the future.” Crowdisland aims to work with a community of investors who are willing to fund and support the creativity and innovation in Sri Lanka. This is an investment opportunity not only for high net-worth investors but also more retail-oriented investors. The platform also provides an impetus for existing entrepreneurs to grow their businesses and future entrepreneurs to take the plunge, he added.
Wilkinson Innovations Founder and Lecturer at Stanford Business Graduate School, Amy Wilkinson who was present at the event, said, “I am very optimistic that crowdfunding will open up new avenues to support young and fast growing companies. In the US crowdfunding is a very big and successful platform launched in 2009. Last year alone, US$5 billion was raised for kickstarters, one of our three main platforms, for a whole variety of different businesses such as analytics, big data, restaurants, music companies, consumer retail companies and so on. There are multiple platforms in the US, but it has opened up a whole new way for young start-up companies.”
York Street Partners (Pvt) Ltd Managing Director Sujendra Mather, said, “We aim to start from a slightly limited platform of equity crowdfunding and work towards large scale project crowdfunding that can reach rural entrepreneurs, once the government implements a more supportive regulatory framework. We are currently hampered with old regulations that are prohibitive to crowdfunding.” He said that Crowdisland is neither a deposit-taking institution or a trading house nor an investment advisor. It’s a platform which brings entrepreneurs and investors together, facilitating the development of new ventures. The online platform will not influence either party in any direction, instead being an interface between investors and entrepreneurs, enabling the transfer of ideas, information and capital between them, Mr. Mather said.
Successful startups are known to grow as fast as 100 per cent year-on-year for the first few years and need investment to fuel this growth. Given the high-risk nature of start-ups, it is essential to spread the risk of an investment across the crowd of investors and ideally an investor should allocate capital across a portfolio of these early-stage venture investments. The concept of crowdfunding is designed to nurture a strong network of peers, mentors and strategic investors to groom Sri Lanka’s next wave of innovators and entrepreneurs, officials said.