Crowdfunding comes of age
Category: Alternative Finance | 13 December, 2012 11:29
As the UK crowd funding market heats up, peoplefund.it's Dawn Bebe reveals crowd funding is actually a very British invention.
It's official. Crowd funding is currently red hot in the UK right now.
This week Kickstarter revealed it's raised £2million for projects in its first month in the UK
The world's self-proclaimed largest crowd-funding platform, Indiegogo, has now said it's eyeing the UK for 2013, aiming to bring local functionality to our shores.
And NESTA has revealed in new research that the UK crowd-funding market has grown from virtually nothing in 2 years to be worth £80 million in total this year, and that, worldwide, the crowd funding market is thought to be worth $1.5 billion.
All this crowd funding action has not gone un-noticed by the Government:
Danny Alexander, The Treasury Minister, signalled in a post Autumn Statement public debate, that given the difficulties facing UK small and micro businesses, alternative funding routes, like crowd funding, were seriously being looked at by The House of Lords.
However despite its current ‘red-hot’ status, the concept of ‘Crowd funding’, where people back ideas with pledges of cash in return for rewards or cash, is not a new idea.
The Yanks may have stolen a march on us with this newfangled web-enabled platform version of it - but actually it was we Brits who invented the concept.
Yep. Way back. When Victoria was on the throne (Queen - not Beckham). A time when funds were weak, but civic pride was strong.
It was called 'public subscription' then. Not the catchiest of names but, the good people of Britain regularly dug deep into their pockets and contributed personally to a number of large parks in Manchester. Famously Sheffield factory workers got together to contribute to the building of Sheffield University - aiming to improve their future education, health and economic well-being. Many public statues in the towns and Cities of Britain were 'crowd funded'.
Now, in these equally tough economic times, crowd-funding has returned - 2.0 stylee to democratise the finance process.
Technology is enabling more great ideas to happen and flourish - bringing people together - across geography and communities - to back great ideas.
True to its British heritage and culture, the new Peoplefund.it network reflects a sense of community and place. Working in partnership with Plymouth University, the UK’s University of Enterprise, it aims to engage, inspire and transform communities through grass roots enterpreneurialism - one street at a time.
Most of the projects that get funded, are backed by people from within local communities, and in the UK (Kickstarter has revealed only 39% of its funds have come from UK backers so far).
It’s already proving itself a great platform for entrepreneurs, socialpreneurs and civic-preneurs who want to make a difference - remodeling the relationship between communities and UK enterprise.
Both platforms are ‘rewards-based’ and enable people with a great business idea to ask the general public for the funding they need to set up or expand. The business sets a target for the money it wants to raise and explains how it will use the cash. People can then make pledges for small amounts of money in return for a reward if the target is reached.
Peoplefund.it has raised £40k in six days for The Bicycle Academy, thought to be one of the UK’s fastest crowdfunded projects ever.
Other successful projects to date include the Leeds Bread Co-op, three bakers who wanted to set up a bakery. With the help of Peoplefund.it’s campaigning to local media and promotion across the River Cottage, Landshare and energyshare networks, they have have smashed their funding target of £8,000.
Crowdfunder recently helped The Magnets, a group of a cappella stars making great music simply with their mouths, exceed their funding target when they raised £15,081 and A Great Little Place, a social network site based in London which raised £11,023 from 380 funders.
What we’re discovering is that crowd-funding delivers benefits far and beyond pure money. It’s about validating an idea. Gaining support via crowd funding proves there is a loyal market for your project. More importantly a successful crowd funding bid could even give your bank enough confidence in your idea, to provide second stage funding.