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Alternative Finance blog


5 years ago

Link to article cited: http://www.ft.com/cms/s/0/c3d01f9a-b75a-11e4-8807-00144feab7de.html#axzz3SZTQDCf2 

By Sacha Bright, CEO www.businessagent.com 

Judith Evans’ recent FT article ‘Start-Ups Pile Into Crowdfunding Platforms’ (FT 20th February 2015) touches on what I find most exciting of all about equity crowdfunding – what I see as its democratisation of investment. As well as providing start-ups and early stage businesses with a viable alternative to conventional investment and bank funding – both avenues often closed to new businesses – it opens up opportunities to everyone, because your stake can be as little as £10.

And for many relative novices, as well as seasoned financial professionals, a spread of small investments may offset to some extent the greater risk of investing in a start-up.

Ms. Evans’ piece, however, centres on the news that the creators of the dashboard parking app JustPark have raised £1 million in just four days on a crowdfunding platform. Great news for the company and its investors, but what’s even more interesting is the way equity crowdfunding can simultaneously make a positive contribution to other spheres of the business – such as marketing and recruitment. As a by-product of their fundraising initiative, JustPark are quoted as having benefitted from ‘a surge in job applications and a threefold increase in downloads of its app, which matches drivers with vacant parking spaces outside homes, churches and businesses’.

Steve Smith, the founder of Poundland, which is now a £966 million listed company, is another Crowdfunding aficionado for similar reasons – in launching his online estate agency Estates Direct he viewed equity crowdfunding as a marketing exercise in tandem with its primary function as a funding vehicle:

‘It’s more than just financial,’  he said. ‘You can buy in the public’s belief as well. It’s about engaging the public and getting them to be part of what we do.’

Of course, there’s no avoiding the fact that this is still a sector in its infancy involving investment predominantly in start-ups, of which many fail. Nevertheless, in my view these developments show the way forward, in which equity crowdfunding is not just a great leveller but also an exciting new way to maximise word of mouth marketing alongside your fundraising activities and, as Steve Smith put it, ‘engaging the public and getting them to be part of what we do’

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