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Crowdfunding Explained, News and Research

Crowdfunding Industry News

Crowdfunding for business Finance and Equity – Hero or Villain?

Video tutorial explaining crowdfunding

At CrowdFundMe2 we are always happy to discuss crowdfunding and offer free talks or seminars to professional firms and organisations.

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There are 4 main crowdfunding categories

1. Donation

Usually for good causes, charities and social enterprise where the crowd give money to great causes in which they believe

2. Reward

For good causes, small/medium business and particularly popular for launching gadgets, high tech, film, books and other creative arts.

You don’t repay the money pledged but provide interesting and often novel “Perks”.

Incredibly powerful and cost-effective in validating and marketing your product widely, in addition to raising funds.

3. Debt or Loan

This is like a bank loan but from lots of people and you present financial plans and trackrecord for the scrutiny of the crowd who decide whether to lend or not – usually on an all or nothing basis.

You have to repay the loan plus interest but the crowd take no stake in your business.

This market is still developing in the UK but there are some great platforms already.

Crowdfunding

Crowdfunding Vs The Bank

A crowdfunding bond market has been developing in the UK too – a sort of hybrid of debt and equity

4. Equity or Shares

Raise capital in return for a stake in your business with far less red tape, investment bankers and costs compared to the stock market. Often equity raised through crowdfunding may be wrapped in an efficient tax wrapper, such as an SEIS which is explained in the video below.

The crowd are attracted by a large “upside” potential in often young businesses in expanding markets such as sustainability, food, renewables, celebrity and technology.¬†Furthermore, the opportunity to spread relatively small amounts of investment capital across many businesses, and efficient tax wrappers, make sound campaigns very attractive to the crowd.

Despite some of the hype around crowdfunding viable campaigns must be well founded with quality financials, sound evidence of market potential, great management teams and demonstrate a command of social media to engage your potential crowd of investors.

 

Seed Enterprise Investment Scheme (SEIS) Explained

Valuing Your Business

One of the mot difficult questions for owners and investors! This article and infographic is helpful.

Other Types of Alternative Finance

We can also guide you with Venture Capital, finding a Business Angel and building a “Pitch”.

Business Angels inject investment funds into your business and often bring valuable expertise to help you make a success of the investment for all parties. The Angel Investment Network is a UK example of such an angel network.

Research

Nesta, Cambridge Centre for Alternative Finance at the Judge Business School (Cambridge University) and KPMG have led the way in publishing an annual UK crowdfunding market report.

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Alternative Finance

An interesting research paper considering the judgement and wisdom of the crowd may be accessed below.

Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts – Download, Share or Embed (Mollick & Nanda, 2014)