Crowdfunding is best described as an online version of the BBC television programme Dragons' Den.
Crowdcube was founded in Exeter in 2010 and was the first company in the world to fund start-ups and business expansion in this way. It is the world’s leading investment crowdfunding platform having raised over £200m for those seeking investment which relates to 473 raises. The company has over 300,000 investors.
This company, and the growing number of companies in the same field, gives entrepreneurs a way of connecting with ordinary people (‘armchair investors’) to raise venture capital. By attracting lots of investors who invest smaller amounts of money into a person, company, product or idea you can bypass the traditional ways of raising venture finance and reach a crowd that is looking for more interesting investments. This may be a suitable option for your business.
New crowdfunding organisations continue to start up in the UK making this sector a significant area of growth. Some crowdfunding organisations cater for specific business sectors. For example, Kickstarter is the world's largest funding platform for creative projects.
Funding Circle is a peer-to-peer lending platform rather than a crowdfunding service used to provide initial capital. Funding Circle provides loans to businesses that have already been operating for at least two years but raises funds in a similar way, online.