INVESTMENT
Major crowdfunding websites, such as Kickstarter, Indiegogo, GoFundMe, Seedrs and Cambridge’s own SyndicateRoom, have helped thousands of companies secure funding directly from the public"
repeat of the feat in 2001 when 12,000 copies of their unwritten album were pre-sold to fund its production, spawned an industry that is now commonplace. Cambridge Judge Business School’s research showed the entire UK online alternative finance industry grew by 35% year-on-year, reaching £6.2bn in 2017. Within this, equity-based crowdfunding (where investors own a share of the business) grew by 22% to reach £333m; real-estate crowdfunding grew by 200% to £211m; and donation- based crowdfunding only grew by 2.5%. Cambridge opportunities Different crowdfunding platforms usually offer either equity-based or donation-based crowdfunding. The former include opportunities such as that recently offered by
Accessing these opportunities simply involves creating a free account on one of the crowdfunding websites, which offer simple search functions by category or region. Donation opportunities typically start from £10 and just require a debit or credit card. Equity-based crowdfunding, in addition, typically requires completion of a form. All crowdfunding campaigns are time-limited and usually money is only drawn down if the company hits its fundraising target. Sites such as Crowdfunder, however, do offer projects a ‘keep what you raise’ option. Crowdfunding platforms earn money by levying charges on the amounts raised by businesses raising money, or from investors if the company they have invested in increases in value or possibly when shares are sold.
Cambridge-based vegan restaurant brand, Stem + Glory, which is plotting a national roll-out. It managed to raise £156,610 from 187 investors in return for 5.7% of its equity, smashing its target of £100,000. Companies on crowdfunding platforms are allowed to opt to ‘overfund’ if they wish, but for a larger percentage of equity (aka the share of the company’s valuation, which is returned to investors when the company is sold or listed on a stock exchange, or by trading that share with another investor). On the other hand, donation crowdfunding usually includes causes raising money, such as when St Mary’s Church in Whaddon, Cambridgeshire, raised money on Crowdfunder for a new roof after its lead tiles were stolen.
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ISSUE 03
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