It’s a year since we published our guide to the Top 5 Crowdfunding sites for the UK, and things have really moved on.
Interest in crowdfunding in the UK has increased dramatically, and we thought it was time to review the marketplace again as we reach the end of 2013.
So, what’s changed?
The Industry gets organised
Well for one, 2012 saw the launch of the UKCFA, an industry group for the crowdfunding platforms. It’s not that surprising that they saw the need for one – after all, crowdfunding is still a relatively new concept. In some ways, the UK provides more scope for innovation. For example, equity based crowdfunding platforms are well established in the UK now, but they are still illegal in the US, which has struggled to move with the times despite the Jobs Act.
The UKFCA has developed a Code of Conduct, which its members sign up to and which is designed to develop a responsible industry and help grow momentum behind this type of investment.
UK based platforms see explosive growth
This time last year, it was a struggle to put together a list of home grown talent, let alone our Top 10, but that’s all changed. In fact now, the choice of crowdfunding platform is so much larger that it can be difficult to work out which one is best.
Whichever route you choose, be that equity, (where you give shares in the company in return for upfront investment), rewards or a loan from ‘the crowd’ otherwise known as peer to peer lending, you’ll need to know who’s who in the UK crowdfunding scene.
So here’s our Top 10 list, with a short explanation of what we think each brings to your project.
Seedrs has had an incredible year. It is one of the leading equity crowdfunding platforms in the UK having raised £1.4 Million for 27 crowdfunded campaigns in their first year – where the average amount invested was £631. They’ve hosted some notable campaigns including NearDesk (the desk smart card people) and PixelPin. The approach also seems to work very well for start-ups emerging in the sharing economy like GoCarShare
Escape the City turned down two offers from venture capital investors to crowdfund their start up costs, raising £600,000 in 12 days. And they aren’t the only fledgling businesses to have taken off with the Crowdcube equity crowdfunding model. E Car Club – the car club for electric cars raised £100,000 from just 62 investors too. Watch Crowdcube over the coming months – we think they are set to grow.
Now one of the most powerful rewards based platforms, Crowdfunder (known as the platform behind Hugh Fearnley-Whittingstall’s FishFight and LandShare campaigns, merged with Peoplefund.it last year. It’s firmly targeted at creative and community projects and their mission is to ‘crowdfund the future’.
Buzzbnk is a crowdfunding platform with a difference. Not only is it designed for social entrepreneurs looking to fund social or environmental projects, but Investments can be made in return for goods or services or as a loan. You can also ‘mash-up’ your loan offer with rewards as well. Pants to Poverty is a great example of that: www.buzzbnk.org/bonkofpants
Bloom Venture Catalyst is the only rewards based crowdfunding platform in the UK to allow pretty much any project regardless of whether it’s a commercial or social idea. The project could be a start-up business, a charitable venture or a prototype idea. They also dedicate a project/community manager to you to help you put your campaign together and make the most of it (we believe they are the only crowdfunding platform in the UK to offer that).
WeFund claim to be the first home-grown UK based crowdfunding platform, having launched in October 2010. They focus on creative projects and their approach is pretty straightforward and rewards based. You need to reach your funding target to keep the money pledged, but if not, there’s no charge.
At the opposite end of the spectrum, Funding Circle is a funding platform with a difference. Since launching in August 2010, Funding Circle has raised nearly £80m in loans for businesses. The site allows investors to browse businesses that Funding Circle has underwritten and approved for lending. It’s probably best suited to businesses that are looking for an alternative kind of loan, in fact some would regard this as a peer to peer lending platform rather than crowdfunding.
Abundance represents a very interesting new economy. You’ll start to see many more niche crowdfunding platforms as people start to leverage community support around specific ideas. Crowdfunding works particularly well for renewable energy projects, and Abundance allows people to invest in and benefit from energy production. When investors buy a debenture through Abundance they have the right to a percentage of the revenue generated from the sale of the electricity produced.
Virgin founder Sir Richard Branson has lent his support to Simon Dixon, the former banker’s peer-to-peer platform which allows companies to raise debt, equity and donations in one place. It’s a pretty revolutionary idea in so many ways as Bank to the Future want to change the way we bank. The aim is to allow business owners to raise different types of finance in one place — and even take money in return for products instead of shares or interest.
Unbound is one of a kind too. It’s probably the only crowdfunding publisher in the world, and it’s based on the simple idea that if authors pitch ideas for books and supporters then pledge financial backing in return for rewards, you create a circle of author/fan lovie-ness. Unbound doesn’t operate outside the traditional publishing model, but they do challenge it.
They have literally just raised £2m in more traditional funding themselves to expand the platform and grow more.