If you take a look at the global search statistics for the term ‘crowdfunding’ over the past few years, it’s quite an eye-opener. The phrase has filtered into the public consciousness in recent times and appears deceptively simple. And yet, despite its rising profile, if you ask someone to explain exactly what’s involved, the conversation will sometimes stall.
Funding By The Crowd
Of course, that’s partly down to the fact that the term is a bit of a catch-all. After all, surely funding by the crowd is nothing more complicated than connecting those with cash with those who are looking for it?
That’s true – to an extent. But what happens in each case after the cash is handed across can be very different. The funder might receive gifts, shares in a business, an I.O.U., one of the first finished products or any manner of variations falling in between.
Technology, Society…And The Law
Technology continues to drive efficiencies in society by helping us to find what we need, when we need it. Legislation has struggled at times to keep up with the extension of funding options beyond traditional circles. When it comes to other people’s money, existing laws are designed (quite rightly) to protect members of the public from losing Granny’s inheritance by investing without understanding the risks.
But there has been a fundamental shift in recent years towards appreciating the increased potential that comes from involving reaching and involving people. A change is coming.
Why Don’t We All Use One Crowdfunding Platform?
Throw a mix of rewards, sectors and regulations into the mix and it soon becomes clear that one platform won’t suit everyone.Take Kickstarter for example. With arguably the highest profile of any crowdfunding site, it continues to grow in size every year. But, with a couple of notable successes (such as the Pebble watch opportunity, which sought $10K yet managed to raise over $10 million) the founders are clear that the platform is designed to help creative projects, making it unsuitable for most technology businesses.
Buying A Piece Of The Pie
There’s another key difference. When you support a project on a platform such as Kickstarter, you’re not buying shares in a company. ShareIn is different. By deciding to invest your hard-earned money, you’re buying a share directly in a business – a piece of the pie – in the hope that this will become more valuable if the business is a success.
A crowd will always contain a wider range of experiences than one individual can have alone. And often that breadth of knowledge will translate into a better ability to judge the potential for a business to succeed. For that reason alone, we don’t filter the opportunities. Instead we’ve developed technology that gives you the tools to search the opportunities by focusing on the business details that really matter to you as an investor. And the funding target is not ‘all-or-nothing’. Instead, each company has the choice of setting a minimum and maximum target and justifying how the funds would be spent in each case.
Why Growth Companies Are Important
We’re committed to finding funding for small businesses that need to grow. It’s impossible to overstate just how important small but growing businesses are to the economy of the country as a whole. It’s critical – not just to those running the companies but for us all. There are all sort of statistics out there that back this up – for example, the top 6% of high-growth companies have been proved to create over 50% of all employment growth in the UK. It’s not simply about helping the companies themselves to be successful. It’s about the positive effects that this success can bring to others in an economy that is under pressure.
We’re about to launch here at ShareIn. Over the coming months, we’ll keep you up to date with how things are progressing for the companies that have listed and give you an insight into our thoughts on crowdfunding – how society is changing and how, with a little help, we plan to help to connect both sides. It’s all about the conversation so please connect with us on Twitter, LinkedIn and Facebook and let us know your thoughts in the comments below.
We can’t wait to get started. Thanks for joining us.
By Jude Cook (@ShareIn)