What is crowdfunding?

Crowdfunding is a fairly new way for businesses to get finance. Also known as crowd financing or crowd-sourced capital, it involves a number of people each investing, lending or contributing smaller amounts of money to your business or idea. Your idea will usually be shown on a website which attracts a wide range of small investors. Once your targeted amount of money is reached the funds are released.

Why would I want it?

This can be an innovative way of raising money without having to go to a bank or commercial lender. It also does not normally attract fees so is very cost effective. Crowdfunding can also raise the profile of your idea or business which can help the business before it is launched.

How does it work?

Your business or idea is showcased to potential investors who will then decide whether or not to invest. A fresh idea or something innovative will work best with future projections and a credible business plan in place. Web based these platforms have a wide following and can offer your proposition to a whole range of investors.

What are the benefits?

If your business or idea is good the funds can be quickly raised. It is a good alternative to the traditional lenders. You can gain a lot of exposure prior to your launch which can benefit you greatly in the future. There are normally no upfront fees to be paid.

What are the pitfalls?

If your idea is new you should ensure that you have the intellectual property rights covered before going live. Your idea is up there for all to see! Crowdfunding is mostly unregulated. It may take time to get to your targeted amount.


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