Member Article

Crowd-funding for small businesses

An innovative funding scheme for start-ups called Crowdcube, has used its own crowd-funding model to secure significant investment from over 150 investors.

Crowdcube.com has received £300,000 investment in just 10 days from 162 investors, which will help to fuel its next phase of growth.

The site offers an alternative source of business finance for companies, acting as a platform to connect with a nation of ‘Armchair Dragons.’

Members of the public can invest and receive shares in UK-based companies that register on the site to raise funds.

The tool aims to side-step the need to compete for limited business angel or venture capital funding, and hard to get and expensive bank finance.

Recently business secretary Vince Cable announced the creation of a new taskforce to boost the future of business finance for SMEs, including a focus on crowdfunding.

He talked of “exciting innovations that provide alternatives to bank lending,” and said: “Businesses are selling bonds directly to their customers, and peer-to-peer lending has opened up opportunities for saves to invest directly in the fortunes of UK businesses.

“I want to investigate and dismantle any barriers to these and future innovations.”

Darren Westlake, co-founder and CEO of Crowdcube, said: “Business finance is at a critical turning point as last week’s announcement by Vince Cable highlights.

“The future success of Britain’s economy is dependent on empowering small business Britain to succeed and grow, but access to traditional methods of funding are often a barrier.

“The emergence of alternative sources of business finance, like crowdfunding, is already proving to be a very effective and popular solution for both entrepreneurs and investors.”

He went on to detail how Crowdcube had raised £1.7m in finance for 9 small businesses since launching in February.

Edge Forecast Software became the ninth successful deal on the site, raising £15,000 in return for 20% equity in its financial forecasting solution.

This was posted in Bdaily's Members' News section by Tom Keighley .