Crowdfunding (1)

Is crowdfunding good or bad for UK business?

Crowdsourced funding website Kickstarter recently launched in the UK to great fanfare. The site has been a huge success in America and many UK entrepreneurs have been waiting eagerly to publish their projects.

Since launching just over 3 years ago the site has seen over 70,000 projects being pitched with a success rate of just over 40%. The amounts being raised are not to be sniffed at either. Several projects have raised over a million dollars such as the video game console OUYA which raised $8,596,474 and E-Paper watch Pebble collected $10,266,845.

With the UK Government keen to support new start-up businesses, through schemes such as Entrepreneurs First, how important will crowdfunding sites like Kickstarter, IndieGoGo and PleaseFund.US become?

These funding models are spawning a mass culture of altruistic investors. Investors on Kickstarter do not gain a share of the company or have any say in how it should operate. Instead they are investing in an idea they like and believe should become a reality, with the added benefit of getting early access, tickets to a lunch premiere and so on.

The traditional model of bank lending is no longer the only source of large investment and the Government recognises this. A spokesman for the Department for Business, Innovation and Skills recently said: “The Government is working with industry to support a range of new ways of lending, and the growth of innovative financing models like crowd funding is an exciting development.”

Research from Fasthosts ‘Home Business Survey’ 2012, found that 72% of Britons would consider or have considered launching their own business, proving we are a nation of Entrepreneurs. The same study however, found that lack of funding and capital, was one of the top 5 reasons preventing such activities.

Fasthosts Marketing Director, Claire Lewis, told us that Fasthosts is fully supportive of entrepreneurs looking to these alternative funding sources:

“I think it’s great that schemes such as crowdfunding and Government based initiatives exist, and help develop the ambitions of our future SOHO’s and SME’s. One of the biggest factors preventing start-ups is a lack of investment and support through the formative years. With the increasing challenge of securing funds for new ideas, I believe that Britons should consider new forms of funding for their projects, and I fully support crowdfunding programmes. Talking to a trusted tech supplier can also help. They can advise on the technology available to see a business through all stages of growth, without the need for large capex costs.“

What are your thoughts on Crowdfunding – is it good or bad for UK business?

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