to fund, or not to fund
Being a fan of neither bank nor venture capitalist I quite liked the idea and ethos behind the crowdfunding movement. Banks I’ve always found to be your best friend when you want to borrow and your worst enemy the second they want it back; foresight and support they merely pay lip-service to. VCs are legitimate rapists, without the balaclava. Beware the Faustian pact you make with both the minute you climb into bed!
Crowdfunding, pioneered by the website company Kickstarter in 2009 and used initially by the likes of bohemian rock-groups, avant-garde authors and wannabe film-makers, will shortly reach one billion pounds raised, £56m within the UK. This year alone, British ‘investors’, through various sites and schemes, chipped in over £26m and allowed them to take equity shares, usually small and manageable equity shares, in growing businesses. And don’t be fooled into thinking it’s all about the start-up as Stelios’s orange company and Hugh Fearnley Double-Barrelled’s River Cottage empire both dipped a considerable toe in the water and took what was offered. Alternative funding, of which crowdfunding is a central component, is predicted as contributing upwards of four billion pounds to the UK economy during the next year or two.
But before you reach for your wallet and mouse, maybe everything that glitters on the crowdfunding front isn’t gold. To date, and after three years of trading, no-one who has invested in any business on Crowdcube has made a cash profit, and furthermore, of the almost twelve thousand Britons who have used Kickstarter, 62% failed to reach their funding goals, and hence provide no return. Ouch. The two corkers that caught my eye include the crazy Geordie council worker who wanted £2million to buy a yacht and sail it round the world, whilst filming it en-route for his supporters, and the Welsh chef who wanted a cool £5million to build a real-life Willy Wonka chocolate factory, complete with chocolate river and edible landscape. The former raised seven pounds sixteen pence and the latter, the grand sum of £200. Mind, if you’re gonna dream, you may as well dream big.
