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Industry Insights

Crowdfunding - it isn't all about the money!

Crowdfunding - more than just raising finance.

In the first of a series of info-blogs, we explain that whilst crowdfunding can help start-ups, early stage and established businesses raise finance - there are a number of wider benefits to entrepreneurs.

Techology is a powerful enabler. Crowdfunding has evolved rapidly with different types of platforms offering different approaches:

  1. Kickstarter - a rewards based offer

  2. Funding Circle - debt based peer-to-peer lending platform

  3. Sponsume - donation based platform aimed at charitable projects

And of course our very own GrowthFunders - a UK-based equity crowdfunding platform.

Initially many of the organisations raising finance were from the creative and innovative media sectors.  Artistic projects were popular – funding an album, supporting independent film and the like.

The rise of peer-to-peer lending and equity crowdfunding

Investors began to consider peer-to-peer lending as a viable investment strategy.  With typical bank deposits attracting low interest rates, many investors decided to bypass the banks and lend directly to individuals and businesses via online peer-to-peer lending platforms.

Equity crowdfunding and the Seed Enterprise Investment Scheme 

The introduction of the Seed Enterprise Investment Scheme (SEIS) provided major tax incentives for existing and 'would be' angel investors.  

This has led to the launch of equity based crowdfunding platforms which essentially digitise and streamline the existing early stage investment process for existing and aspiring angel investors.

Equity crowdfunding platforms open up the early stage investing marketplace to a wider audience of serious investors.

Download our Entrepreneurs guide to SEIS for more information

 

So what motivates existing and new angel investors?

Well it's generally two things:

  1. Generate a return on investment

  2. To 'put something back'

Many angel investors are successful business people in their own right.  They have started, built and exited a business successfully. They understand the challenges, the risks and the rewards - they have been there and done it!

 

More than just the money - reality checking and road testing...

But although equity crowdfunding is primarily about raising capital, it isn’t the sole function or benefit.

Equity crowdfunding also enables entrepreneurs and innovators to ‘road test’ their concepts, ideas and developments. 

They can harness the ‘power of the crowd’ to not only develop a base of ‘raving fans’ (potential customers and salespeople) but also gain priceless marketing exposure. 

The crowd will either endorse the concept or they won’t, but their actions will reflect their opinions – a real time, real life, ‘reality check’.

Are you ready to start your pitch? Sign up for free today and start your exciting funding journey with GrowthFunders.

Start to raise investment for your company today

Driving Growth.
Creating Value.
Delivering Impact.

Backed by

Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.