The success story for crowdfunding reads like a fairytale. Companies raised $2.7 billion via the crowd in 2012, by 2015 this figure had shot up to $34.4 bn. The benefits for companies are that they can source investment from the crowd, and it's great for those that are having no luck with their bank.
Crowdfunding is set to draw in even more fans. From this month, UK savers can add crowdfunded bonds to their ISAs, which offer higher rates of return than current rock-bottom interest rates. Kickstarter, Seedrs and Crowdcube are the some of the big names, but niche platforms have sprung up to help connect businesses with their target audience.
Trillion Fund was launched five years ago as a site for renewable energy start-ups; it has since merged with Buzzbnk, a platform for social enterprises and charities, and counts Dame Vivienne Westwood as its majority stakeholder. Trillion Fund has helped raise over £5 million for more than 130 projects.
Entreprenuer Alessio D'Antino wants to bring the power of crowdfunding to the food and beverages industry with his platform, Crowdfooding, which launched its first campaign this autumn for Chocothon. Crowdfooding offers rewards and equity-based financing, to help budding companies foster their community and raise funds, as well as a pre-campaign service.
"For the food and drinks industry, this makes us different to other platforms. It is a good assessment tool for entrepreneurs to understand whether crowdfunding is suitable for them.
"We can use a small description of product with a video to see how people react to it. We collect feedback [and] pre-orders from people [to] understand how many people are willing to buy a pre-order as an expression of interest to investing in the business."
From this month, UK savers can add crowdfunded bonds to their ISAs, which offer higher rates of return than current rock-bottom interest rates.
Businesses can even take a DIY approach with Your Brand Crowdfunding, a recently launched all-in-one service that lets companies launch their own campaign under their own brand. Alessio's advice?
"Keep control of the platform and way you build it. There are so many tweaks you will need to do, to make it work."
If you’re looking for finance for your business, please have a look at our partner website Informed Funding. Its online advice and offline seminars will allow you to make the best choice for your business.