If you have a business idea - a vision of the next big thing - but don't have the finance to see it through from conception to market, there are many ways to get the funding you need. Some borrow from family and friends, while some go down the venture capitalist route, and for the past few years, there has been a new avenue for gaining the money you need to keep moving - crowd funding.
As the name suggests, crowd funding allows you to pitch your business vision and the target amount you need to make that happen to the public at large - your crowd. The project you pitch needs to have a visible end - so it may be that you pitch for the investment needed to have your invention manufactured. If the potential investors like your idea, they will pledge to donate towards your goal, and their money will generally only be debited from them if and when you have enough pledges to reach your set financial goal. Likewise, the charges of the crowd funding platform you have chosen will only be applicable if your project raises the funds you need.
Crown finding is certainly gaining steady steam here in the UK and there are many crowd funding sites to choose from:
US-based Kickstarter is probably the most globally well known of the crowd funding websites and was recently launched into the UK. Aimed at creative projects, the site raised over £2m in the first month here. Kickstarter charge a 5% fee on successful completion.
Crowdcube based in Exeter, is well suited to start-up businesses needing significant investment to get growing. With over 30,000 registered investors having raised over £5m, it has also recently been awarded FSA approval. Crowdcube charge a 5% fee on successful completion.
If you are at the pre-launch stage and need help specifically with seed capital, Seedrs is another UK based crowd funding company with FSA approval. With a low entry level for investors, pledges can be made from £10 to the full amount you need. Seedrs charge a 7.5% fee on successful completion.
If you'd rather not give up a share in the profits, London based IndieGoGo is open to creative and innovative ventures and offers the possibility of allowing you to reward investors with items related to your project rather than an ongoing interest in your business. And if you don't raise the funds you need, you are free to go ahead with just those that have been pledged. Sponsume charge a 4% fee on completion.
Of course, every crowd funding site offers different benefits - it's important to research the best one for your needs. Take a look at the other ventures on the site, and the investors, and marry these up with your goal.
In terms of your goal, be realistic and make sure you have researched your business case precisely.
Entering your project onto a crowd funding site is relatively easy, and apart from the fees mentioned above, listing is generally free. Make sure you populate your listing with as much information as possible - and make it exciting - investors need to get a buzz from you.
And finally, when it comes to marketing your project, don't just stick your project onto the crowdfunding site and leave it ticking on its own. Entice potential investors to your project using every tool available to you. Social media is great for this and a great deal of momentum can be stimulated through the likes of Facebook and Twitter.
If you choose to make crowd funding work for you, you'll find the process almost addictive - watching often to see how you are going in reaching your milestone and giving you increasing momentum to see your vision become reality. Good luck!
Date: August 20, 2021