Crowdfunding isn’t just for vanity projects, so here’s what you really need to know about raising capital through the crowd
The concept of raising cash by asking lots of people to stump up small amounts is often thought of as a vanity funding mechanism: publish your book, record your music, enlarge your breasts (yes, really). However, as banks have become more wary about lending money to businesses, so the appetite to raise funds via other means has meant an increased demand for crowdfunded finance. Whether it’s a startup needing capital or an established company with a new product to finance, crowdfunding might be the answer. But does crowdfunding actually work, though? Crowdcube, one of the best-known business-level crowdfunding sites in the UK, had funded more than 350 businesses by the end of 2015. On average, 245,000 investors spend £2,000 each (for a total of £138 million), with each campaign funded in an average 40 days. Crowdcube has a success rate of 55%, so it doesn’t work for everyone.