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Crowd funding 21 march 2013
- 1. Why not join the crowd and discover the new way to fund your growth? An overview of UK Crowdfunding Alan Scrase 21st March 2013 1
- 2. Context • SETsquared Partnership - the Enterprise collaboration of the Universities of Bath, Bristol, Exeter, Southampton and Surrey • Approximately 7,400 academics working at these universities are responsible for ten per cent of the UK's Higher Education research budget • Partnership formed in 2002 led by Southampton with Bath, Bristol and Surrey (Exeter joined in 2011) • Funded under Higher Education Innovation Funding until 2015 • Collectively supports the growth and success of new business opportunities through spin-outs (20%), spin-ins (80%), licensing, acceleration and incubation
- 3. The SETsquared approach • SETsquared approach – Review and apply to enter – If accepted then • Work with Centre staff • Appoint mentor • Regular Business Review panels • Aim to assist high-growth and innovative companies with – business planning – management team development – Securing funding • Grants • Banks • Investment including crowdfunding
- 4. UK has a wealth of entrepreneurial talent • UK has lots of great ideas • Need to cultivate ideas into the next Google/Twitter/GroupOn • Often stifled by access to Money Google says searches for "business plan UK" have increased by 60% over the past year and searches for "small business loan" are up by 34%
- 5. The way it is… • Grants complicated and time consuming • Debt finance hard to come by • Venture capital difficult to find for smaller requirements • Business angels – limited investments • Typically a syndicate each investing £10k - £100k • Is there a way to have 5000 angels each investing £10? • What if anyone could become a business angel?
- 6. Crowdfunding • Crowdfunding is an approach to raising the capital required for a new project or enterprise by appealing to large numbers of ordinary people for small amounts • Social Media • Crowdfunding examples • Kiva.org - $325m funding raised, >777,000 lenders, ~800,000 entrepreneurs • Kickstarter.com – >24,000 projects funded, > $250m pledged to-date, 2m people have pledged
- 7. Equity Funding Gaps £100k £1m £2m • Most fundraising to date in lower gap but rapidly growing • Model has shown potential to raise larger amounts • Participation of larger investors
- 8. Annual growth in the number of crowdfunding platforms worldwide In 2011 453 platforms raised $1.5 billion in project and business financing Source: Crowdsourcing.org
- 10. Risk-Reward profile where crowdfunding may fit • Mix of motivations for investing • Financial and non-financial returns • Model’s suitability for social ventures
- 16. FundingCircle Loan Crowdfunding http://www.crowdcube.com/pg/how-it-works-4
- 17. The stages of equity crowdfunding
- 18. Crowdcube Equity Crowdfunding • Crowdcube provides a FSA approved web-based central hub for entrepreneurs to meet micro-investors. It uses the power of Crowdfunding to provide a unique service to two types of people: • for entrepreneurs to source equity funding more accessibly than conventional routes • for smaller investors to have the opportunity to invest in exciting high-potential businesses “$100 invested in Microsoft at their IPO would now be worth approximately $35k.”
- 21. Crowdcube Equity Crowdfunding https://www.fundingcircle.com/how-it-works#how-it-works-video
- 23. Crowdcube to date Success so far… Deals successfully funded £5.1 million 35 funded so far… £100,000 >30,000 largest single investment members £2,547 £1 million av. investment FSA Authorised biggest deal
- 24. Some challenges • Regulation • Process challenges • Post-investment • Getting the best participants • Potential returns
- 25. Regulation • Important to ensure investors are protected • JOBs Act is one option but not necessarily the best one • EU looking at options • UK FSA have started approving already • Need for more transparency and consistency across Europe
- 26. Process challenges • Flexibility around valuations • Collaboration between investors • Investor transparency and signals • Using online tools to aid in fraud detection and business evaluation
- 27. Post-Investment • Managing input from many investors • Incentivising investors with small stakes • Protecting investors post-investment • Voting rights • Exploring liquidity for investors • Ensuring businesses remain attractive to follow-on funders
- 28. UK Crowdfunders
- 29. Alan Scrase SETsquared at the University of Southampton Incubation Centre Manager a.scrase@soton.ac.uk 07825 761 652
Notas del editor
- Welcome My name is and I am…
- Just to set it in context
- Our approach ..
- The UK but….
- Where we are..
- Kiva - Despite being only 39 months old it has raised over $87m, funding over 213,000 entrepreneurs. They have over 500,000 lenders worldwide. Ebbsfleet United Football Club was bought by approximately 26,000 people each paying £35 - £910,000 Zopa - have over 300,000 members and total disbursals have reached £50m.
- Ignoring bank borrowing for now
- Introduction pages with video
- Chance to contribute small amounts for set package
- And for larger amounts. Possible to become dealers or agents
- Way to introduce small amount lenders to viable propositions
- Lender controls who and how much and the rate
- Business gets funding at a the best rate from the offers received
- Process
- Have to take a questionnaire as potential investor to prove you are en “educated investor”
- Detailed “online prospectus”
- Use video to promote and therefore “meet” the team