Digital Capital Raising - South Africa

The country in South Africa is projected to reach a total transaction value of US$69.56m in the Digital Capital Raising market market in 2024.
In 2024, MarketMarketplace Lending (Consumer) is expected to dominate the market with a projected total transaction value of US$63.24m.
When compared globally, the United States leads with a cumulated transaction value of US$36bn in 2024.
South Africa's digital capital raising market is rapidly growing, with a shift towards blockchain technology and crowdfunding platforms gaining popularity among startups.

Definition:

The Digital Caiptal Raising segment relates to digital financial services for business customers, and private borrowers. Included are Crowdinvesting models, which focus particularly on start-ups exchanging investment for company shares (equity-based), and Crowdfunding solutions, which are used for non-monetary compensation, for example product launches, music, art & film financing (reward-based). The market also includes bank-independent loan allocation for SMEs (Crowdlending) and for personal loans (Marketplace Lending or so-called Peer-to-Peer lending) through private or institutional investors via online platforms. In view of processing complexity, this market is focused on small and medium-sized enterprises (SMEs), freelancers and private persons. Bank financing is not considered, neither are any financial aspects that reach beyond the scope of small and medium-sized enterprises or donation-based Crowdfunding models.

Structure:

Digital Capital Raising consists of Reward-Based Crowdfunding, Crowdinvesting, Crowdlending and Marketplace Lending.

Additional Information:

The market comprises of transaction values, campaigns, average funding per campaign.

Alternative financing for SMEs and freelancers
Equity-based Crowdfunding (or Crowdinvesting)
Reward-based Crowdfunding (or Crowdfunding)
Alternative lending for SMEs and freelancers (bank-independent loans)
Online marketplaces for personal loan applications and private investors
Peer-to-Peer loans with interest rates depending on internal credit scoring of the platform provider

Traditional bank loans
Traditional venture capital investments by institutional or private investors

The Digital Capital Raising market in South Africa is experiencing significant growth and development.

Customer preferences: South African customers are increasingly turning to digital platforms for their capital raising needs. This shift in preference can be attributed to several factors. Firstly, digital platforms offer convenience and accessibility, allowing customers to raise capital from anywhere at any time. Secondly, digital platforms often provide a wider range of investment opportunities, allowing customers to diversify their portfolios. Lastly, digital platforms often offer lower fees and charges compared to traditional capital raising methods, making them more attractive to cost-conscious customers.

Trends in the market: One of the key trends in the Digital Capital Raising market in South Africa is the rise of crowdfunding platforms. These platforms allow individuals and businesses to raise capital from a large number of investors, often through small contributions. This trend is driven by the increasing popularity of social media and the ability to reach a wide audience quickly and easily. Crowdfunding platforms also provide an opportunity for individuals and businesses to showcase their ideas and projects, attracting potential investors who are interested in supporting innovative and impactful ventures. Another trend in the market is the growing interest in digital asset investments, such as cryptocurrencies and blockchain-based projects. South African investors are increasingly exploring these alternative investment options, attracted by the potential for high returns and the decentralized nature of these assets. The rise of digital asset exchanges and trading platforms has made it easier for investors to access and trade these assets, further fueling the growth of the Digital Capital Raising market in South Africa.

Local special circumstances: South Africa has a well-developed financial services sector, with a strong regulatory framework and a robust capital market. This provides a conducive environment for the growth of the Digital Capital Raising market. Additionally, the country has a large and diverse population, with a growing middle class that is increasingly seeking investment opportunities. This presents a significant market potential for digital capital raising platforms.

Underlying macroeconomic factors: Several macroeconomic factors are driving the development of the Digital Capital Raising market in South Africa. Firstly, the country has a high level of smartphone penetration and internet connectivity, providing a solid foundation for the growth of digital platforms. Secondly, South Africa has a relatively young population, with a high proportion of tech-savvy individuals who are comfortable using digital platforms for their financial needs. Lastly, the COVID-19 pandemic has accelerated the adoption of digital technologies across various sectors, including finance. This has further boosted the demand for digital capital raising solutions in South Africa. In conclusion, the Digital Capital Raising market in South Africa is experiencing rapid growth and development. Customer preferences for convenience, accessibility, and cost-effectiveness are driving the adoption of digital platforms for capital raising. The rise of crowdfunding platforms and the growing interest in digital asset investments are key trends in the market. South Africa's well-developed financial services sector, large population, and favorable macroeconomic factors contribute to the growth of the Digital Capital Raising market in the country.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.