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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New DoT Minister misses maritime 

It is disheartening to note that the first briefing given by the new Minister of Transport, Joe Maswanganyi, yesterday outlining the immediate tasks for his department made no mention of the maritime industry. 

This, despite the recent revealing of the DoT’s Comprehensive Maritime Transport Policy as well as the central role that the DoT’s agency, the South African Maritime Safety Authority (SAMSA), plays in the government-driven Operation Phakisa focused on growing the maritime sectors. 

This, despite the need for that agency to see the finalisation of an appointment of a permanent CEO and despite many other initiatives that are currently receiving and in need of attention. 

His briefing understandably looks primarily at road transport issues and we give cognizance to the importance of this sector in his stable. It also briefly mentions rail in relation to the agreement with China to build the Moloto Rail Development Corridor, but it fails to even give a nod to the maritime sector. 

And, as it refers to the proud history of struggle heros who dedicated their energy to fighting for better quality of life for their comrades and his commitment to patriotism as well as the National Development Plan, he may well have taken note that the maritime industry is the sector in his portfolio that offers a great opportunity for delivering on these promises. 

It would be disappointing if the current momentum gained in the industry in sensitising government to the potential impact of the maritime sector is lost. We are fortunate, however, in the fact that the Deputy Minister, Sindiswe Chikhunga, is already known to be a driver for maritime awareness within the Department and it is hoped that her voice will continue to be heard. 

An African passport by 2018?

One of the many challenges that the highly mobile people of the maritime industry face is that of accessibility to jurisdictions within Africa. This is particularly frustrating for Africans aiming to work on the African continent and may even hamper emergency response to potential maritime incidents.

Discussions at the recent World Economic Forum meetings in Kigali, Rwanda refocused attention on the idea of introducing an African passport by 2018 – a move that will surely be welcomed by proponents of the maritime industry who face delays when responding to clients’ emergency requirements in other African countries.

Leading a session, South Africa’s Minister in the Presidency: Planning, Monitoring and Evaluation and Chairperson of the National Planning Commission, Jeff Radebe, implored delegates to reflect on the continued need for visas in Africa and to meet the 2018 deadline of creating an African passport.

In February this year the African Development Bank released the Africa Visa Openness Report 2016, which highlights the fact that the continent remains largely closed off to African travellers. According to the report:

“On average Africans need visas to travel to 55 percent of other African countries, can get visas on arrival in only 25 percent of other countries and don’t need a visa to travel to just 20 percent of other countries on the continent.”

 

The clock is ticking on the African Union’s (AU) goal and vision for Africa as set out in Agenda 2063 which envisions the establishment of an African passport and an end to visa requirements for all Africa citizens in Africa by 2018. There are no clear indications from the AU as to the progress that has been made in this regard, but it is clear that it falls within the Union’s Flagship Projects in the First Ten Year Plan.

However, three years into the First Ten Year Plan, many of the goals remain largely aspirational and it is not clear where or what the stumbling blocks would be to the realisation of an African Passport. Common sense, however, suggests that without the reality of a peaceful and secure Africa as envisioned by Agenda 2063 – the likelihood of an agreement on free movement on the continent is more than 18 months away.

Chairperson of the AU, Dr Nkosazana Dlamini Zuma writes in her foreword to the report, however: “We believe that the free movement of people is possible, which is why Agenda 2063 calls for the abolition of all visa requirements within the period of the Ten Year Implementation Plan and the creation of an African passport.”

Perhaps regional visas are more realistic in the short term, but  any move to finalise agreements in this regard will certainly be welcomed by the African maritime community.

 

Coastline confusion

Can anyone tell me exactly how long South Africa’s coastline is? I am talking about our coastline – excluding any islands that we may have jurisdiction over.

Situated at the southern tip of Africa and surrounded by sea on “three sides,” we like to assume that we have access to a generous coastline, but the actual length does not seem to be cast in stone.

I’ve had the opportunity to dwell on this elusive fact over the last few months while writing and editing a number of pieces for a variety of sources. I was even tempted to take out a length of string and attempt to do something I last did in High School during map work in Geography, but decided rather to spend my evening drinking wine with friends (achieving life/work balance).

But yesterday I received a press release that stretched our coastline to its limits. Apparently South Africa now has “almost 4,000 kilometres” of coastline to be proud of.  And it does not seem that the PR company was adding any offshore coast from island territories to this accumulation.

I am used to receiving press releases that peg the coast at anywhere between 2,500 km and 3,000 km long, so this additional 1,000 kilometres is really a windfall for the country.

Perhaps this is part of Operation Phakisa’s strategy to expand the maritime industry (the press release did allude to this Government-led project), but I am not sure that our neighbours would be too happy with us claiming a portion of their coastline in order to increase our maritime prospects.

So – can anyone tell me the real, undisputed length of our coastline?

 

Access denied: flirting with the maritime economy?

There’s a general movement that is gaining traction in the maritime sectors that aims to boost the industry’s contribution to job creation and the GDP. The Blue Economy is on everyone’s lips and national, regional, continental and even international strategies are being developed to see our oceans contribute meaningfully to our human desire to produce and prosper.

With so much attention it should, therefore, not be surprising to see a whole new set of eyes flirting with the possibility of developing a long term relationship with the ocean sector. It’s time to give them a dance ticket and allow them onto the dance floor.

At the South African Maritime Industry Conference (SAMIC) organised some three years ago by the South African Maritime Safety Authority (SAMSA), there were people from every sector and plenty who saw themselves as merely standing on the side line hoping for an opportunity to show their moves.

Paul Maclons, Managing Director of Smit Amandla Marine, was unequivocal in his statement during one of the panel discussions at the conference: that the solution for a full and inclusive dance floor was not in promoting the practice of cutting in on existing dancers – but rather on extending the party and mixing it up from the DJ’s box. Well, okay Paul did not mention anything about dancing or DJ’s, but his message was clear – we need to expand the industry to accommodate newcomers.

The truth is though that the industry is expanding and there are more opportunities, but equally the economic reality of a capital-intensive international industry is seeing more consolidation and joint ventures as existing companies seek relationships with other established partners that can offer them the opportunity to extend their own dance cards.

Does that mean that there is no opportunity for newcomers? Are they destined always to be wallflowers?

The quick answer to that has to be NO! There are some newcomers to the industry aiming to show off their signature moves on the dance floor. Our job is not to stop mid beat and point or jeer. Our job is to make sure that there is space for them even if their rhythm is a little different to ours. Our job is to learn a little from the new beat.

This year’s SAMSA Maritime Industry Awards aims to recognise the new dancers on our floor. If you’ve recently launched or know of a company that has launched into our space – please take the time to nominate. It takes courage to start something in any industry and especially into one so entrusted to the “old guard”.

http://www.maritimeawards.co.za  

 

Have you read the Minister’s speech?

Have you read the Minister’s speech? That’s the question being most asked this month at maritime functions and it refers to Minister of Transport, Dipuo Peters’ discourse at the South African Maritime Safety Authority’s (SAMSA) AGM at the end of September where she called for “immediate action from the (SAMSA) Board in order to resolve the appalling state of affairs at SAMSA”.

What usually follows the opening question in these chats amongst maritime colleagues are the knowing nods and ensuing discussion on the schism that we all believe to exist between the Department of Transport and its subsidiary body – as if this could be the explanation as to why the minister was so severe in her deliberations.

This leads into a conversation on the three pillars of SAMSA’s mandate and how many seem to believe that it is clear that the Authority has taken to heart the third point: to promote South Africa’s maritime interests as its over-arching purpose – perhaps to the detriment of the first two tenets of its existence which relate to the preservation of life, environment and property at sea.

It is an interesting dilemma for the industry. We’ve lauded the Authority, and particularly its CEO Commander Tsietsi Mokhele, for his foresight and passion to champion the maritime cause. We’ve watched him weave the maritime thread into the government conversation. And, as we begin to see a level of recognition across a number of government departments, we are told take stock of an entity that requires some oversight.

One cannot fain surprise that expenditure on conferences and advertisements ballooned from R12m in 2012 to R54 million in 2013. Most conference organisers and many publications have viewed the Authority as an unofficial Lotto pay-out as they cashed in their rate cards and sponsorship tiers. SAMSA has been visual at most events on the calendar including one hosted by us – the Maritime Industry Awards.

Was this a waste of resources? I dare to say that a little discernment could have been applied, but that some of the television slots highlighting the cadets on the SA Agulhas were well timed and could have contributed to a broader maritime awareness amongst our youth. So too do career and job summits, but a rubber stamp of approval associated with the sponsorship and exhibition stands of just about every maritime exhibition and conference could have been undertaken with some introspection.

What the industry has been waiting for is a follow-up to the successful and refreshingly different South African Maritime Industry Conference (SAMIC). Organised by the Authority, the conference has the ability to knock many conferences off the calendar by providing one unified thought tank for the industry.

Envisioned to fill a gap left by the demise of the National Maritime Conference of the 1990’s organised by industry for industry – SAMIC was well positioned to meet the needs of an industry ready and willing to move forward. It seems a pity, however, that this conference, anticipated to take place before the end of 2014, may now never take its rightful place on the calendar.

But this is not the only reason the minister pegs the Authority to be “in serious trouble”. Citing plummeting cash flows (a 350 percent decline), irregular expenditure (R28.8 million), fruitless and wasteful expenditure (R1.1 million), a total asset decline of 96 percent and the cost escalation associated to the SA Agulhas of 31 percent – Peters did not mince her words when she asked that “immediate actions be taken” to make the entity viable and able to deliver on its legislative mandate.

The SA Agulhas may lie at the heart of many of SAMSA’s reported woes, but most in the industry will agree that the Authority’s sheer determination to create a dedicated training vessel for their cadetship programme should not go unapplauded. It was never going to be an easy or cheap endeavour – something that is clearly realised by the Authority. Their Annual Report highlights the need for projects such as the cadetship programme and the SA Agulhas to be funded externally.

“Projects will therefore be funded only to the extent to which project funding is available and the organisation’s core revenue will not be used. The SA Agulhas and the cadetship projects, which contributed significantly to the deficits will soon no longer be funded by SAMSA,” it states in the report.

But perhaps what is most alarming and does not come across clearly in the visually alluring Annual Report is the “lack of reliability of reported information”. The Annual Report provides performance targets that are generally reported as being met or at least mostly met, but the Auditor General raises concerns that these targets are “not specific, measurable or time bound”.

In addition, what is not evident in the Annual Report, but is highlighted in the Minister’s speech is anomalies of data – or data spike for the fourth quarter of the reported year. For instance the tally of inspections of both local and foreign going vessels catapults rather unrealistically in the fourth quarter – calling into question the validity of what is presented.

Similarly, although a 100 percent target of audited training institutions is reported at year-end, according to the speech, data allegedly reveals that no audits were carried out within the first three quarters of the year.

“The fact that the auditors could not validate the performance results and that the third quarter results of some KPI’s seem to be far apart from the fourth quarter results, call for an objective independent performance audit of the 2013/2014 performance information,” she says.

With much more fodder to chew on in both the Annual Report as well as Minister Peters’ speech, it would be unfair to try and unpack the issues here. And as transport month draws to a close and we mull the pronouncements of Operation Phakisa, perhaps our closing issue of Maritime Review Africa for the year will delve a little deeper into the state of South Africa as a maritime nation on the continent.

If you have anything to say on this topic, we welcome your input both on and off the record.

THE ABOVE ARTICLE APPEARS AS THE EDITOR’S COLUMN IN THE SEPT/OCTOBER ISSUE OF MARITIME REVIEW
You can read the full magazine HERE

New entrants should be accommodated in blue economy

Respondents to our Operation Phakisa survey were unanimous in their view that the maritime industry has the capacity to cater for new entrants with 71 percent deeming it “realistic” and a further 29 percent seeing it as “very realistic”.  Just under 30 percent, however, believe that it is unrealistic to expect the maritime industry to create one million jobs and for the blue economy to reach R1.7 billion by 2033.

The South African presidency is due to announce the outcome of deliberations held under the auspices of the Ocean Labs in Durban this week at an open day. Targets and activities committed to by stakeholders will be made public and it will be interesting to see if expectations can be met.

Most of our survey respondents, who mostly represent industry stalwarts of ten or more years, agree that involvement from government is “very important” (71 percent), but view government catalysts during their tenure to be “unsatisfactory” (71 percent).

We are still accepting responses to the survey <CLICK HERE TO PARTICIPATE> and will bring you news from Durban and the Phakisa Open Day in the next issue of Maritime Review Africa.