crowdfunduk

What can we read into this infographic on Crowdcube first year as the first business finance crowdfunding platform?

UK businesses have raised £2.3million via Crowdcube in its first year.  The Rushmore Group achieved  the first ever £1 million through crowdfunding. The platform was named as best start-up 2011 by Startups.co.uk and nominated for “Best Alternative Funding Provider 2012” by the Moneyfacts Group. This is a fantastic achievement for Crowdcube and for crowdfunding in general. Success like this should increase the number of people who invest beyond personal connection.

What helps to inform crowdfunding in the future?

Successful businesses on the platform

21% of prospective bids were accepted to be posted on Crowdcube. Of this 7% successfully reached their target. This is lower than most crowdfunding platforms which generally have a success rate around 40%.  With equity-based crowdfunding investors are expecting a real return on their money, in the medium to long-term, rather than the usual rewards or perks. Investment is a risky business and the small unsophisticated” investor can stand to lose a great deal. This is different to donation-based crowdfunding where friendship or a shared passion forms the basis for involvement.

Location of businesses

The successful projects are all in the South of the UK. The majority of projects currently on the platform are from the South, some from the Midlands and only a few from the North/Scotland.  This fits with the overall UK pattern which has more businesses in London and the South East than any other region. The recession has also hit the North hardest and the local economy in the South is recovering quicker. 

The entrepreneurs

The average (not sure which average they chose though) age of the entrepreneurs was 42. This fits with research that says the majority of entrepreneurs are white males, in their 40s, living in the South East. 10%  were female. At present around 14% of small and medium enterprises are run by women.

Entrepreneurship is of increasing importance when unemployment is so high. With so many women and young people out of work and the North hit so hard - we need to encourage a greater age range, more women, more from ethnic minorities across the whole UK to start businesses.

The investors

8811 people are registered on Crowdcube with 872 (or around 10%) actively investing and 74% of that number investing only once. Which means that there is massive untouched potential within Crowdcube’s community. With interest rates so low, and promising to be for some time, more people are likely to turn to investing - if they feel the system is trustworthy. Crowdfunding platforms should prove popular as they are a community in themselves and encourage personal connection between investor and entrepreneur.

What do we need to do to encourage a positive approach to crowdfunding from both investors and entrepreneurs?

• increase the traffic to crowdfunding platforms 
• publicise successes in both raising finance and increasing customer base
• build trust with, and competency of, the small investor
• increase the competency and confidence of women, young and ethnic minority entrepreneurs in placing strong business plans
• encourage and support applications from across the country - targeting areas of high unemployment