Starting a business, turning that idea into reality, is always a challenge. But the current economic situation is making innovation and growth of new businesses so much harder. Access to finance is problematic, the perception is that the High Street banks are not lending, and public sector cuts have meant a similar reduction in the amount of money available for grants.The pressing need to find new and better ways to support indigenous startups and encourage entrepreneurship has been answered with the global phenomenon that is crowdfunding. Crowdfunding has changed the way start-ups, student enterprises, social and community projects raise money, it is simply using social networks – online and offline – to access an alternative source of funding.Bloom VC (Venture Catalyst) is the brainchild of entrepreneur Amanda Boyle. It is the first crowdfunding platform of its kind, designed and created not only to offer fledgling entrepreneurs with a business idea the opportunity to secure start-up funds but to provide the necessary ongoing support to ensure the idea becomes a success.
Bloom was born after Amanda realised that securing funding to start or grow a business was becoming increasingly difficult for the seasoned entrepreneur, and that for a young person or someone starting a business for the first time it must be well nigh impossible. She believed that startups and young entrepreneurs were being let down by the system, unable to start or indeed grow a business due to lack of available funding on fair and decent terms.
Amanda became passionate about finding a way to solve the problem, not just for business but for social enterprises as well. She discovered the American crowdfunding platform Kickstarter, the most successful in the world, and decided to create her own version of the model.
“There is distinct lack of funding for early stage startup companies and for budding entrepreneurs to initially seed their business concepts,” says Amanda. “There is an urgent need to provide a new source of funding to meet this demand.
“Individuals and early stage startups have always sought support from family and friends, even when banks and funding institutions were actively lending. The explosion of social media has simply extended their reach.”
Crowdfunding is actually not a new invention, it has been around for hundreds of years, but has been propelled into the forefront by the explosion of social media. As users of Facebook, Twitter and LinkedIn grow, so do the opportunities to reach out for support.
The model is remarkably simple but incredibly effective, it is micropatronage, or grassroots funding; tens, 100s or 1,000s of people donate £10, £15, £50, £100 or more to ventures in return for treats, gifts, even a simple, public ‘thank you’.
Under the Bloom model individuals or startups create an online elevator pitch for their idea, detailing what it is, why it’s important, how much money is needed and for what. Using video and images to create a compelling story and offering exciting and attractive treats in return for donations, the pitch is then uploaded onto the Bloom site where the project idea owners share it with their social networks, both online using Twitter, Facebook and LinkedIn and offline amongst friends, family, neighbours and colleagues.
Each project has up to 60 days in which to raise the funds. If they fail, they don’t receive a penny, but if they succeed or even raise more than requested they get the whole lot.
The promises of money are not charitable donations, nor are they investments or loans. The project owner or young entrepreneur is not expected to give up equity in their fledgling business nor pay anything back, instead they maintain complete control over their work or business.
It might seem a radical approach to supporting entrepreneurship, but Amanda believes the time is right.
“Crowdfunding is not only a worldwide phenomenon, it is the latest evolution in the way new businesses and young entrepreneurs raise their start-up funds,” she said. “In the 1980s there was VC funding, the 90s saw the rise of seed capital as a source of funding, then came angel funding – but the future is crowdfunding.
“Bloom is right at the heart of this evolution.”
Meet Amanda Boyle in person and find out more about how to start your own crowdfunding campaign on Monday 21st October at 1pm at the splendid Mozilla space.