Who are the founders of the ZAAR crowdfunding platform?
The Malta Business Bureau (MBB) and the University of Malta (UoM) have set up the Foundation for the Promotion of Entrepreneurial Initiatives (FPEI) to promote entrepreneurship in Malta and support local start-ups. ZAAR – a donation/reward-based crowdfunding platform – offers an alternative to raise finance for projects and business ideas.
What is crowdfunding?
Crowdfunding is a fast growing alternative means to raise funding for projects or ventures by raising many small amounts of money from a large number of people. It is a true means of giving buzzing entrepreneurs and start-ups a chance.
Why set up a platform in Malta?
In April 2013, the MBB published an assessment study on ‘Market Gaps in Access to Finance in Malta’. Conclusions indicated how 30% of local enterprises find it difficult to raise the finance required to further their development. This amount was typically between €20 and €50k. ZAAR seeks to get these great ideas funded.
How will the crowdfunding platform work?
The platform will be launched as a donation/ reward-based crowdfunding model.
Donors also referred to as backers, support projects voluntarily without expecting a financial return or equity. Instead, they would be willing to accept a reward that is promised to them by the project owner.
The business proposal or project will undergo a standard due diligence process, and the platform will take an all-or-nothing approach. Therefore there will be mechanisms in place for refunds, should a project not meet its funding targets.
What are the fees to use the platform?
ZAAR will keep a 5% commission +18% VAT on funds raised in successful campaigns, together with Payment Gatway charges that range from 1.8% + €0.18 per transaction to 3.4% + €0.35 per transaction.
The platform will take an all-or-nothing approach for projects and a keep what you raise for philanthropic causes. Donations to any projects that will not get funded will be refunded to backers
CASH-OUT (per transaction) Domestic & Non-domestic
- € 0.20 (within SEPA zone) €2.50per cash-out outside of SEPA
- £ £0.45per cash-out £1.90 per cash-out
- Other currencies USD/CHF/SEK/NOK/DKK/PLN/CAD €2.50(billed in your currency) €2.50(billed in your currency)
What is the financial limit for a campaign?
There is no limit set, this is to be decided by the project owner.
What is the time limit for a campaign to achieve its funding goals?
This can vary from project to project, set a sense of urgency by a shorter time period, 20 to 40 days can be successful also.
What equity is passed to investors?
No equity is given, as this platform is donation/rewards-based platform.
What do you mean by a ‘reward’?
Backers support projects without expecting a financial return. However a reward, which is clearly promoted through the campaign (for example, a fashion designer may opt to give a scarf as a reward for donations of above a certain value).
What businesses are more suited for crowdfunding?
We will be open to take businesses from any sector, but as is the practice with crowdfunding, it is generally the creative and cultural sectors, software developers, tourism operators, social enterprises, NGOs and local government that tend to be the most active beneficiaries.
At what stage of market readiness should businesses be when launching their crowdfunding campaign?
Crowdfunding is typically used by organisations for research, financing and marketing. So, it is the start-up or project owner to decide what they want to achieve from crowdfunding and ensure that they can provide what they have promised, once funds are raised. On the other hand, the supporters can also assess whether the proposed project is viable. A start-up cannot expect to raise funds if their proposal does not factually show it is good enough to succeed.
What should a campaign consist of?
Successful campaigns usually have a mix of presentation, video and a story, which together give clear information on the product, and details of how the funds will propel the project. Check out the tools we have developed on the tool kit page within this site.
Are projects vetted before appearing on the platform?
Upon receipt of an application, a due diligence exercise following criteria will be carried out, prior to allowing the project to be promoted to the site.
What protection is there for entrepreneurs that use the platform?
It is assumed that the entrepreneur has thoroughly researched their idea and built a solid business plan, and protected ideas where necessary. The platform takes no responsibility for litigation against a campaign from third parties.
What protection is there for the supporters?
Whilst campaigns are vetted and fraud detection systems are in place, the supporters give funds at their own free will and with no financial payback. In some cases, a non-financial reward is promoted for donations of a certain value. Supporters should use caution when donating, and not donate more than they can afford to.
What happens to those projects that don’t reach their funding goal?
Funds will be returned back to the backers in the case of an unachieved target.
Who owns the project?
The project is 100% owned by the entrepreneur.