Crowdfunding as a tool for the boat building sector

One of the most common moans made by delegates at many of the maritime conferences is the lack of access to capital for start-up projects in the maritime sectors. By its nature, the maritime sector is a capital intensive space to play in and many entrepreneurs’ dreams are dashed sitting in a chair at their bank.

Crowdfunding has emerged internationally as a potential source to deliver funds to enthusiastic entrepreneurs who have a good idea to sell. Can this form of finance be harnessed for the likes of the small boat builder keen to bring a unique platform to the market?

Cape Town-based entrepreneur, Jako Laubscher is testing the waters with his River Lounge concept on the Indiegogo platform which claims to have raised over $1 billion in crowdfunding for projects around the world. The platform has successfully hosted a number of other boat-related projects including the HYPAR smart boat, and the Keelcrab Sailone.

The River Lounge concept is seeking crowdfunding to take it to the next phase of development.

There are, however, a number of projects that do not seem to have gained traction yet including Laubscher’s River Lounge. Although currently in its concept stage, the River Lounge idea is an interesting one that could potentially attract interest from local and international investors.

The River Lounge is a fully automated hydraulically platform with hidden units that open and close with your remote control. It is a fully roadworthy product that can open on its own trailer for a 42m2 two bedroom apartment with amenities, air con, braai area, fridge, freezer (under deck), kitchenette AND/OR launch onto the water for a day out on the dam/river.

For international shipping it fits into a 40ft container or your garage. Weighing less than 2,5t your average truck or sizable car can tow the River Lounge to various destinations.

In contrast to the slick presentation and detailed drawings associated with the River Lounge on the Indiegogo platform is the rather crude conceptualisation of a kit to change a stand-up paddleboard (SUP) into a motor boat. Unsurprisingly the idea – which seems to consist of literally tying a chair and small outboard onto a SUP – has not garnered much attention.

Monty Furmie is another South African with maritime funding aspirations on Indiegogo. This Cape Town-based software developer is hoping to get crowdfunding to launch a sport fishing boat and charter business to be known as Kraken Oceanic. Capital raised via the platform will be used to train currently unemployed people in the skills associated with the building of the required vessel for the business.

In addition, Furmie states as one of the goals, the ambition to create open source software and systems for all communications, energy, GPS and Sonar/Radar requirements. “This software will be released as open source software and made available from our website as well as a publicly accessible GitHub repository,” he writes in his overview of the project on the platform.

Choosing a platform

Indiegogo is one of many international platforms that host start-up projects as well as fundraising opportunities for charities, but local South African versions are also available. The choice of platforms is one of the first steps towards running a successful crowdfunding campaign as one needs to consider their audience reach as well as their business model.

The South African based Jumpstarter platform has an “all-or-nothing” protocol built into their business model. As a registered Non-Profit Organisation (NPO), Jumpstarter states that all projects must be 100 percent funded before its time expires to be able to claim the funds. Funds relating to projects that do not meet this requirement become usable for other live Jumpstarter Projects as credits or pledges.

They maintain that this reduces the risk for all involved as it does not compel the project originator to follow through on a concept without the full financial support required.

By contrast the Indiegogo site offers two funding models and allows campaigners to access funds even if their full project goal is not met if they choose the flexible funding model. Choosing the fixed funding model, however, sees contributions returned if campaigners do not meet their goal. The choice depends on whether the project could go ahead without the funding goal being reached or not.

Obviously a commission fee is structured into the pricing and the platforms stipulate the percentage of funds raised that they claim. This can vary across the different platforms and can additionally include commissions and charges on funds that are transferred via a credit card.

Luring funders

Whatever the platform, however, the project really needs to catch the attention and emotions of potential funders who are generally everyday internet browsers that need to be persuaded to be parted from their cash.

This necessarily begs the question of trust. Will South African, and indeed African campaigners, be deemed to be trustworthy on international funding platforms where perceptions of a corrupt continent may thwart calls for investment?

Most platforms make it fairly easy to create a funding project or campaign – but on the surface it does not seem that even the most reputable sites are immune to hosting scams. Indiegogo, for example, recently hosted a scam that netted a campaigner $850,000 in a couple of days for a innovative artificial gill that “lets you breathe underwater”.

A company called Triton seems to have capitalized on the lack of knowledge surrounding marine ecosystems by claiming to have invented a device that was able to filter the oxygen out of seawater and allow scuba divers 45 minutes of shallow shipwreck exploration.

Bearing in mind that this is not an isolated scam, investors need to understand that they could be operating in a potentially grey area while those seeking funding need to realise that they need to overcome any skepticism that may exist by being transparent as well as open to questions.

One can be sure that these online platforms that act as facilitators for this funding have built-in terms and conditions that protect them when the fish does not hit the net so to speak.

It is interesting to note that, given the huge potential for crowdfunding to promote entrepreneurship and financing on the African continent, the establishment of the African Crowdfunding Association (ACfA) was established to promote effective self-regulation as well as “build trust and transparency between all actors in the African crowdfunding ecosystem”.

The take-home has to be, however, that both campaign developers as well as investors need to be circumspect about their expectations when using crowdfunding platforms. That said, it could be an interesting space for some maritime sectors to seek finance. Quite honestly, though, it is the platforms that are actually raking in the funds for the role in facilitating the deal – and it is therefore not surprising that a massive plethora of available crowdfunding sites exist.

Perhaps I will start one aimed directly at the maritime industry – anyone keen to fund this for me?

 

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Weekly Press Review – 23 October 2017

Small scale and near-shore fishers walked out of a meeting in Cape Town with deputy-director for fisheries, Siphokazi Ndudane, this week, stating that her explanations relating to the suspension of the West Coast rock lobster fishing rights allocation were not sufficient.

According to the press, a range of issues were raised at the meeting. Hout Bay Fishers Community Trust spokesperson said, “We are asking for Ndudane and the minister to postpone the proposed reductions (of fishing allocations) on the rock lobster and stop the offshore allocations of commercial companies.

“The new fishing season starts next month and we have been waiting weeks for them to provide us with answers.”

No agreement was reached between the fishers and the department with Ndudane saying that legislation could only be changed through the courts.

The press has reported this week that listed chemicals and energy group Sasol’s saleable production for the first quarter of the company’s current financial year increased by 22 percent, compared with the same year.

Small-scale fish production projects may be in jeopardy due to a proposed ban on catching indigenous freshwater fish in the Western Cape for everyone except some private landowners.

According to the press, the ban, proposed by CapeNature, is aimed at conserving species that are being wiped out by hungry invasives such as trout and bass.

The Department if Agriculture, Forestry and Fisheries (DAFF), says that CapeNature has no right to impose the ban as all policy decisions rest with the national government.

The department is in the process of developing a policy on inland fisheries intended to empower rural communities to participate in equitable, sustainable resource use.

Due to the ongoing water crisis in the Western Cape, for the first time in history, ships calling in Cape Town are no longer allowed to fill up with fresh water.

According to the press, within the last week Transnet has confirmed a ban on the sale and supply of drinkable fresh water to all vessels calling at Cape Town – urging vessels to fill up further along the coast.

Transnet says, “While it is conceded that these measures may have a negative impact on some business components, so dire is the situation in the city that the port is resolute in its decision in the interest of basic survival of all who have to live in the region.”

This weekend the 17th Annual Cape Town International Boat Show took place at the harbour at the V&A Waterfront.

According to the press, hundreds of boating enthusiasts descended on the harbour and had the opportunity to marvel at the workmanship of both local and international manufacturers of yachts, catamarans, speed boats, paddle boats and accessories.

Weekly Press Review – 16 October 2017

This week Armscor confirmed plans to buy a new torpedo system for its Heroine-class submarines to replace the existing ageing stockpile.

According to the press, it is unclear how many new-generation torpedoes will be purchased (at an estimated cost of R60 million each), but news of the acquisition coincides with a military budget crisis, with the navy unable to afford vital offshore patrol vessels. The government has also delayed a massive shipbuilding programme, Projects Hotel and Biro, which would create thousands of jobs.

“The value to the country of a torpedo weapons system is minuscule compared with building a ship,” said one arms industry insider.

Earlier this year naval chiefs confirmed severe operational challenges stemming from a R5 billion cut in military spending across the army, air force and navy.

Despite the fact that two major perlemoen poaching syndicates have recently appeared in local magistrate courts, the business of perlemoen poaching remains rife in the Western Cape.

According to the press the police arrested three individuals in possession with approximately R30,000 of perlemoen this week.  The men will appear in court shortly.

South Africa and Mozambique are developing more gas pipelines in order to meet the increasing demand for liquefied natural gas (LNG) in both countries.

According to the press, Mozambique’s Deputy Minister of Mineral Resources and Energy, Augusto de Sousa Fernando told delegates at the International Gas Co-operation Summit in Durban that demand had increased over the last 13 years. He added that South Africa had an opportunity to benefit from the development of LNG in the future by joining other countries in the region.

As part of National Marine Week WWF-Sassi has reiterated its message that whether we will be able to enjoy the simple pleasure of a meal of fish and chips in the future depends largely on the choices that we, as consumers, make today.

Sassi has compiled a list of the status of various fish. Each year this list is reviewed and species are added, removed or have their status changed, according to various species assessments.

Two Ocean Aquarium communications and sustainability manager, Helen Lockhart said, “Teaming up with SASSI this Marine Month provides a great opportunity to take the sustainable seafood message beyond the Aquarium and to focus on informing and empowering consumers during this month.”

Weekly Press Review – 9 October 2017

The Robben Island Museum (RIM) has made headlines again this week rejecting reports that its ferry service is operationally inadequate saying “it is business as usual”.

RIM briefed the provincial standing committee on economic opportunities, tourism and agriculture regarding the incident relating to the tourist ferry, Thandi, which capsized last month.

Committee chairperson Beverley Schafer said the ferry service was “operationally inadequate” to transport passengers.

RIM chief executive Mava Dada said, “We are supporting the SA Maritime Authority with their investigation. Our own internal investigation is also underway to identify any possible blind spots.

“Tourists and guests to RIM are assured that it is business as usual.”

This weekend saw the 29th annual Blessing of the Fishing Fleet festival at the V&A Waterfront.

According to the press the festival is a cultural appreciation and fundraising event packed with all thing Portuguese.

Event co-ordinator, Alberto Goncalves, said, “The event is held to bless the boats and fishermen who go out to sea each year and has become somewhat of a social event. It is also held as a fundraising event for Portuguese welfare.”

The SA Whale Disentanglement Network (SAWDN) successfully completed their farthest disentanglement operation this weekend.

According to the press SAWDN managed to free a 14 metre humpback whale entangled in rope over 40 nautical miles offshore of the Southern Cape coast.

Along with the National Sea Rescue Institute Plettenberg Bay (NSRI), the SAWDN arrived at the scene and found a juvenile whale anchored to the seabed with fishing rope around its tail.   The animal was freed and all lines were recovered.

SAWDN spokesperson Craid Lambinon said, “The cutting operation took 20 minutes. We are confident that the operation has been successful and the whale appears to be healthy.

“This is the farthest out to sea that a SAWDN operation has been conducted.”

Weekly Press Review

Police are investigating the robbery of a Gansbaai perlemoen packing and export enterprise. It is believed that the robbery was an inside job.

According to the press nine men arrived at the premises just after 11pm on Sunday night, showing a police identity card in order to gain access to the property.  They then loaded a minibus with an unknown quantity of perlemoen and left the premises, taking three security guards with them.  The guards were found unharmed in the Mitchell’s Plain area on Monday.

The company remains closed while the incident is under investigation.

A letter in the Cape Times this week written by Professor Kevern Cochrane, professor of ichthyology and fisheries science at Rhodes University, addressed the recent and ongoing protests by small-scale and nearshore fishers regarding concerns about possible reductions in the allocations of West Coast rock lobster in the 2017/2018 season.

According to Cochrane the protests centre on two main issues:  the total allowable catch of rock lobster for the coming season and how that will be allocated between the small-scale, nearshore, commercial and offshore commercial sub-sectors.

Cochrane expressed his concern regarding the response to these issues by the Department of Agriculture, Forestry and Fisheries (DAFF).

“Rock lobster is a vital resource for thousands of fishers on the West Coast and it would be a disaster for them, as well as for the ecosystem, if the department allowed this already threatened species to decline further.

“History will judge whether the department was able to provide the leadership and guidance to reverse the current decline,” says Cochrane, offering four key steps that he feels the department should take in order to fulfil its social, economic and ecological mandate for  this species and the dependent fisheries.

These are:

  • Senior management must respect and adhere to the scientific advice on the TACs,
  • vague promises that controls will be increased in the future are insufficient,
  • the department should urgently convene a working group, and
  • options consistent with the goals of South Africa’s fisheries policy ned to be identifies, while minimising harm to those who bear the brunt of the necessary reductions in some quotas.