Could crowdfunding help your business?

By: Chris Buckingham

Date: 6 December 2012

People{{}}As the retail sector suffers ever more and empty shops on the high street become another pop-up project, we may at least take some comfort from the crowdfunding phenomenon that is spreading like wildfire.

From projects on art to Zulu history, it seems nothing is taboo for this method of funding. Even ‘adult services' are now offered via some crowdfunding platforms.

Are there any business models that are not appropriate for crowdfunding?  Not in my opinion.  Now this doesn't mean automatic success for the campaign or the project leaders. But with the four main crowdfunding models now well established the concept is open for business and incremental shifts in our socio-economic patterns are beginning to emerge.

This isn’t a call for all start-ups to get online and find the most appropriate platform, but it is a call for deeper consideration of the model in any stage of a business.

Warnings have been issued by the Department for Business, Innovation and Skills over the potential for funders in the equity model to invest blindly in businesses that stood no chance of success. But is this simply another instance of the government playing catch-up with market trends and forces?

Across the pond these issues are coming to the fore under the aptly named JOBS Act (Jump Start Our Business Start-ups), where again the issues of risk are being cited as a reason to attempt to limit the market on behalf of the consumer.

Our government shouldn't be given an easy time on this issue. We are talking about a minority of people in the population who would be willing to seek out and invest in these kinds of opportunities. Even if these numbers increased significantly, each individual would probably only be investing relatively small amounts.

Guidelines are certainly needed but guidelines are different from enforced restrictions.

Chris Buckingham is a PhD candidate on crowdfunding at University of Southampton and has taught crowdfunding and entrepreneurship at the University of Winchester at both undergraduate and postgraduate levels.

More information

Crowd funding: a realistic alternative to bank lending?

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