Crowdfunding is great for start-ups and growing businesses, but it can also be used for business survival by commercial and social enterprises. Part of the appeal of Crowdfunding is that it comes in three different flavours.
These are equity funding, loan funding, and rewards or donation based. Whatever sort of business you are, and whatever your sort of business needs, there is the possibility that Crowdfunding will work for you.
“But how do you make it work?” After all, there are some great stories of people getting funding, and sad stories of those who didn’t get any money. So what can you do to give yourself the best chance of Crowdfunding success?
Follow our five top tips for Crowdfunding success:
Tell a great story – people need to know who you are; why you set up the business, and your failures and successes. Be yourself and don’t hold back – after all your pitch, your story, is how you are judged and you want to make this as attractive as possible!
Offer great incentives – the best incentives are low cost to you, but valuable to your backers.
Don’t pitch too high – ask for as much as you need, but no more.
Create a sense of urgency – you want people to act immediately, so explain what happens if they don’t.
Generate lots of noise – speak to everyone in your network. Use social media and look for champions who will support you.
Here are some interesting statistics about Crowdfunding:
The European Crowdfunding market grew tremendously in 2014, up from £864 million in 2013 to £2,124 million at the end of 2014.
The UK is the undisputed leader of the European alternative finance market, with £1,74 billion in 2014.
France is the next largest market in Europe with £109 million in its online alternative finance industry.
Germany has the third-largest online alternative finance market in Europe overall, with £99 million, followed by Sweden with £76 million, Holland with £55 million, and Spain with £44 million.
Equity-based Crowdfunding in the UK raised £84m in 2014.
Loan-based Crowdfunding in the UK raised £1,296m in 2014 – £749m in loans to businesses and £547m in loans to individuals.
All of this is great information, however, this is still a drop in the ocean compared to bank loans.
Bank lending to small businesses in the UK is in excess of £ 30 billion and lending to medium-sized businesses is in excess of £ 50 billion, meaning that crowdfunding was less than 1% of SME business borrowing in 2014.
“So don’t ignore bank loans!”
How can we help?
If you are looking for more information about Crowdfunding and how it could work for your business, ask for your copy of our Beginners Guide to Crowdfunding by calling us on 01234 752 566 or by email at [email protected]