I had the pleasure of being interviewed by Andrew at LawyerFair recently. Find out How to Navigate the Funding Game & Why to Ditch the Business Plan on the LawyerFair Daily Podcast #94. LawyerFair helps businesses to find the right lawyer, at the fairest price. Learn more
The Crowd ’Zine, edited and produced by The Ideas People, is a new innovation magazine for "dreamers, thinkers and doers to learn, connect and grow".
In the latest issue I've contributed a piece called 'How to Hotwire your Kickstarter Campaign' which you can read on pages 40/41 here - and while you're there, do take a look at the other fantastic content in this free, independent production. With information crowdsourced from start-ups, innovators and small businesses, The Crowd ’Zine features articles about people, their ideas and what they’re doing with them, as well as practical tools to enable you to become more innovative in your business, work and life.
This article appears in the March 2014 edition of Insight, the global eMagazine for management accountants by CIMA which is sent to nearly 200,000 members, students and other professionals every month.
The idea of internet crowd sourcing funding for your business start-up is taking off. At a time when bank loans are hard to get, using sites like kickstarter.com to generate funds is increasing.
However, it's not simply turning up online with an idea. Crowd sourcing expert and Funding Game founder Paul Grant says that you need to make sure your proof of concept is firmly in place before you head online to fund raise. Read the full article here
What are the different ways to crowdfund?
In June 2012 Escape the City (Esc) raised £600k on the crowdfunding platform www.crowdcube.com. If that was not enough they broke a new crowdfunding record by raising it in just eight days - 394 investors putting in an average of £1,522. They made it look easy and have encouraged many more early stage businesses to give crowd funding a closer look.
Crowdfunding is on the rise and will continue to be so for at least the next few years. Excluding debt funding there are two main types of crowdfunding platforms:
1. Gifting crowdfunding sites such as www.kickstarter.com or www.indiegogo.com where no equity is involved. The “donations” can be as small as £10 and can involve rewards such as tee-shirts, invites to launch parties and products that have been produced post-funding. Often this type of platform suits creative industries and social enterprise.
2. Equity crowd funding, such as www.crowdcube.com and www.seedrs.com where, in return for cash, a person can play Dragons Den and take a tiny stake in a company that potentially could produce a healthy return on investment. The individual investor or crowd will have no say in the company but often there can be several other fringe benefits to being an investor, similar to the gifting sites above.
With both types of crowdfunding you upload your pitch and then have typically 60 days to secure the full amount of capital you require. If you fall short of the target funding, all the capital raised gets returned. The costs are usually 5-7% of capital raised. For the benefit of this blog post I will focus on equity crowdfunding.
So why were Esc so successful?
The short answer is that their business was simply a good match for equity crowdfunding. Can you say that about your business? Let's take a look at five critical factors for Esc's success when raising equity crowd funding:
Is it right for your business?
Crowdfunding will continue to gather hype in the months ahead. This is good news for entrepreneurs, as it means high valuations, a much quicker route to capital, and access to a large base of enthusiastic investors spreading the word about your business. Should this option not suit your business however, it's important to remember that crowdfunding is just one of many alternative routes to funding. But how do you know whether equity crowdfunding is right for you? If you can tick off all the five points above for your business – then go for it!
This article first appeared at Knowledge Peers 2012
This is a blog post on crowdfunding I wrote for Knowledge Peers in 2012 and reposted here ahead of their Exchange 2013 which included a spotlight on alternative funding. You can read my original post here and find out more Knowledge Peers' Alternative Funding Network on their website.
This month I was delighted to be invited by Julie Hall of Women Unlimited to one of her regular Micro Entrepreneur Hangouts. Julie and I had a great conversation about the different ways that you can finance your business for growth. We also covered crowdfunding, angel investing, business plans and time-saving tips for raising capital. You can watch the video of our conversation here and connect with Julie at @juliehallonline and @women_unlimited
On Wednesday this week I joined a live Q&A session with the Guardian Small Business Network team to exchange some advice and insights on crowdfunding. Also on the panel were crowdfunding platform experts Darren Westlake, CEO and co-founder at Crowdcube, Alysia Wanczyk, marketing director for Seedrs and Ayan Mitra founder and CEO of CrowdBnk, as well as specialists in legal and financial services and entrepreneurs who have received crowdfunding. You can read the transcript of our discussion here.
To become a member of the Guardian small business network register for free here.
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