To grow a promising idea to a full-scale company a business needs funding. There are many different ways to fund a new business e.g. a government start-up loan/small business grant, crowdfunding, angel investors, or venture capital to name a few.
Crowdfunding is a very popular way of raising funds. There are a range of online platforms which offer different models of investment whilst simultaneously generating publicity and gauging public interest at the same time. There are two different types of crowd funding:
If a business is consumer product based then consumer crowd funding could be an option. It allows investors to invest in a business in return for a reward once that specific project has been completed e.g. a bakery business could offer investors a specified number of baked goods on completion of the project. This method of crowd funding can potentially give a business guaranteed sales before manufacturing a product and when the investor’s return is the product itself there are no shares issued or change of control. Take a look at Kickstarter in the UK — Kickstarter and Crowdfund Innovations & Support Entrepreneurs | Indiegogo.
Equity crowdfunding also works through a crowdfunding website and allows a business to raise cash in return for shares in the business. Each start-up decides how much money it wants to raise for a percentage of its company. The amount of the company an investor will be able to own will be proportionate to the level of investment made and if a company does not reach the intended target by the end of its deadline, the money is returned in full. This type of crowdfunding is good for companies that need to raise larger amounts of funding to expand. Take a look at Discover and invest in Europe's most exciting businesses | English (crowdcube.com) and Invest online in startups via equity crowdfunding | Seedrs
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