Crowdfunding is actually far from new, and it may well been the ideal solution for mumpreneurs. It’s been on the modern market for at least the past 5 years but it’s only in the last year that it’s really started to boom in the UK. And in doing so has changed the concept of finance for start-ups.
Gone are the days of persuading Bank Managers that your business idea is viable – despite their lack of knowledge in your market, and despite their bias against female entrepreneurs. Or taking out expensive loans to help get your fledgling company off the ground – only to spend years paying back hideous amounts of interest. This, my friends, is the future of finance, one that is built on mutual respect, pre-paid orders, and supportive communities that will champion your business to the masses. And what’s more, it’s the ideal solution for mumpreneurs looking to start up a new business, especially one that taps into the parent/child target market.
What is crowdfunding
Crowdfunding is quite literally that. Raising funding from a crowd. So rather than looking for one big financial backer, projects will be backed by a large number of supporters, who will each give a portion of the finance required, so anything from £10 to £10k each for example.
But it’s not simply a donation based platform. There are two themes of the crowdfunding scene – rewards or equity. The rewards based theme sees project owners offer a tiered reward structure to their supporters, which may range from a shout out on social media through to receiving a product once it’s been manufactured. The equity based theme is a more traditional finance structure, where supporters effectively buy shares in the project. But generally for either theme, any project needs to reach its target funding for any money to be released.
Why would you choose crowdfunding
You don’t need to put the family home up as security against the finance. You do however need to have a business plan, and should you reach your target funding, ensure you deliver your rewards or shares as promised.
Supporters take part for a number of reasons. Simply https://imagineear.com/pharmacy/generic-lexapro/ because they ‘believe’ in the concept being proposed, that they’d like to see the product on the market, to support and buy into new innovation, or essentially purchase a ‘pre-order’.
For project owners the concept offers much more than mere finance. It allows them to test the market before they launch, ensure there’s a market out there for the taking, effectively sell their products as pre-orders before even going into the manufacturing stage, and essentially create and engage in the community which their business/proposal is going to appeal.
Some platforms also offer ‘match funding’ – where big organisations, corporate or governmental, match project funding if targets are met. Allowing them to pump finance into grass root projects that have already proven their value in the community.
Crowdfunding Platforms
The biggest name in the crowdfunding market is Kickstarter – which started life in America in 2009, and last year launched in the UK. It’s the market leader with regard to straightforward commerce. It has seen businesses funded on its platform go on to sell to Facebook for $2 billion. And a recent article in the Observer newspaper questions the direction it’s going in and its authenticity to the original game plan of simply ‘supporting creativity’.
In the UK Crowdfunder is leading the way with regard to a rewards based platform that puts ‘community’ at the heart of the all the projects it hosts. So each and every project, regardless of whether it’s for business or charity, needs to offer something back to the community in which it will exist.
However the market is huge and diverse, with platforms serving niche audiences, which means crowdfunding sites dedicated to anything from music and film through to green energy and tech. There’s even a platform aimed squarely at mumpreneurs – Mums Mean Business.
For more information about platforms available and codes of practice visit the UK Crowdfunding Association.
Author: Chinny Ogbuagu is a Content Marketer at Pitney Bowes Ltd. She creates content to help and advise small companies on how to build their brands, business and reach. She’s also a keen social commentator. You can find her on Twitter and Google+.
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