Reaching out to the crowd…
Until recently financing a business typically means asking a small number of investors (usually a bank) to each commit a large sum of money. Crowd funding turns that model on its head by asking a large number of people to each invest a small amount of cash. It’s an interesting concept which has benefits all round – an opportunity for fledgling businesses to bypass banks in a bid to access finance and also a chance for those with funds to spare to invest in exciting new ventures, at a level of risk that they determine. And crowd funding is not just for anonymous donors – it also gives friends and family of would be entrepreneurs a platform for investing in a project (or person) that they believe in.
The concept has undoubtedly snowballed in recent years thanks to the prevalence of social media – but the idea is not actually new. One of the earliest records of “modern” crowdfunding is the famous French philosopher and sociologist Auguste Comte in the 1800s. The historical work in which he introduced the sociological theory of “Positivism” to the world was the product of his mass appeal to the French public to help fund his research as a philosopher.
From that early success, the market has moved on massively. It is estimated that in 2015 crowdfunding campaigns received a global total of $34 billion – by means of comparison, that’s nearly double the annual budget for the US NASA programme – and the industry is projected to grow to over $300 billion by 2025.
If that’s whet your appetite, then our article “Demystifying Crowdfunding” in issue 5 of iNsight magazine tells you all you need to know about the types of funding models, and lists a few of the best UK websites to visit before you reach out to the crowd….