Five ways crowdfunding can help your business

Crowdfunding is rapidly increasing in popularity and garnering a lot of media attention as more and more experienced business angels are using it to connect with startups.

This has created plenty of opportunities for the experienced investor, and here are five reasons it’s proving popular:


1/ Diverse portfolios

Because crowdfunding allows the investor to put smaller sums of money into projects, it increases the number of projects you can be involved with. It means you can have interests across a wide variety of industries and avoids the ‘all your eggs in one basket’ scenario.


2/ Fresh ideas

Sometimes investors enjoy the thrill of helping young, fresh ideas get off the ground. Crowdfunding attracts less fashionable businesses, and has famously been used to record albums, launch websites and kickstart niche companies.


3/ Choose your own returns

Along with the unique nature of every businesses bidding for investment, the returns also vary from investment to investment. A financial return can be coupled with a credit in the liner notes of an album, or a baseball stadium in San Diego used crowdfunding added a brick with a personalised message inscribed for every investor.


4/ Manage your risks

In place of a single source of finance, crowdfunding involves many investors contributing smaller sums. Each backer, therefore, has less exposure in the case of failure. And if there isn’t enough interest in a project you’ve signed up to – the target number of backers can’t be found – the investor keeps their money with nothing lost.


5/ Pooled resources

With banks imposing stricter guidelines on who they grant loans and overdrafts to, and individual investors often less willing to plough too much funding into risky ventures, crowdfunding allows small companies the opportunity to access cash by pooling the resources of a network of business angels. And this isn’t just finance, it can be know-how, contacts books and experience.

Whether you’re looking for a straight return on your investment, or looking for something more quirky and less tangible to suit your own particular interests, the sheer variety of businesses currently seeking crowdfunding ensure that everybody has at least one perfect match.

Crowdfunder, Crowdcube and Seedr in the UK, as well as Kickstarter in the US, are all websites which have been launched in recent years to pair startups with investors. The global reach and immediacy of the internet has helped crowdfunding flourish as genuine investment opportunity for individuals, connecting large numbers of people with similar interests to collaborate and work towards a common goal – business success.


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