With crowdfunding firmly making its way onto the mainstream finance map, investment just got personal, and sometimes a little wacky. Supporting a host of projects from the development of cartoon characters to equity financing for startup coffee chains – and almost everything in between – crowdfunding has raised not only billions of pounds of funding but also raised the bar in terms of investment participation for all.
Historically viewed as a novel and niche method of funding business, crowdfunding was the exception to the financing rule book. However, time and time again businesses are showing how effective it can be to raise money through small contributions from a large number of people.
“UK leads the world in #SME finance through alternative finance platforms. #corwdfunding”
As the popularity of crowdfunding continues to grow, this all inclusive investment model is being seen as the modern method for startups and small businesses looking to achieve monetary support, as well as an opportunity for big businesses which use it as a base from which to launch new products and gain PR.
With 2015 considered to be a big year for crowdfunding, the predictions are rolling in for the year ahead. Already leading the world in support of SME finance and job creation, it’s expected that the UK will continue in its backing for alternative finance platforms. Coupled with the addition of considered tax incentives to spur further SME lending on crowdfunding platforms, the UK market is considered red hot for further growth.
Examples of currently funding pitches:
The Good Egg restaurant chain launch
Micro-ID animal microchips development
AEVHA Italian-made accessories label launch
Landsdowne Church, Glasgow, restoration
Wedding Marryokes business development
Dolphin Pool Alarms product development
If you are contemplating seeking investment through crowdfunding, there are a few key points to consider. Primarily – are you ready? It’s essential to get your facts and business plan in order, as these will be key to your pitch. Crowdfunding offers a very social investment culture, but don’t expect all the conversation to be easy going. Investors are still very serious about the commitment they expect so be prepared to be grilled on your business model or product specification.
The next stage is considering which platform is the best fit. With personalities as diverse as the investment opportunities on offer, it is important to ensure that you choose the right platform to work with your business. Consider the products already funding online, and the backing that the platform will offer your pitch. Often, this is the tipping point for achieving your investment goals.
Before you hit go, seek support. Be it a family member or friend critically assessing your business plan, a marketing agency managing your pitch and communication, or building your social media channels to increase awareness, don’t crowdfund alone. This is a very social investment opportunity, and the more voices in your corner, the further your message will spread.
Key benefits to crowdfunding:
Alternative way to access capital funding
Provides market validation if others support your pitch
Develops a supportive customer base
Can be easier than traditional banking based application processes
Free PR and marketing
And finally, often it pays to enlist professional help when looking to crowdfund. A supportive marketing partner can assist with all aspects of a pitch and help drive you forward to success. Key areas to seek support include positioning the product and brand, conducting market research, developing marketing collateral and creative, copy writing as well as social media and PR support. Essentially, the right marketing partner can help you to say what you want to the right audience.
With two clients already geared up for crowdfunding in early 2015, it’s going to be an exciting few months ahead for Denvir. CarGo Seat – a safe and fun booster seat which doubles up as children’s luggage – is looking for crowdfunding investment to launch its innovative childcare product to market.
At the other end of the product scale is Energylinx for Business which provides an online comparator platform for SMEs to compare energy suppliers. This pitch is currently live on Crowdcube, and can be viewed here.
If you feel crowdfunding is the next step for your business, and it very well could be, do you research, make your plans, and go for it.
This is one time when it’s a good idea to follow the crowd.
To find out more about crowdfunding contact Denvir today.