Crowdfunding has been on the rise for a number of years now, with many of us being familiar with Kickstarter and other, similar crowdfunding websites. On these sites a product is funded by “backers”, who are essentially investing in a business idea or product and receiving rewards in return for doing so.
The concept of crowdfunding is now reaching other areas of business including more traditional business investment, where crowdcube are the leading platform. 388 businesses have been successfully funded through crowdcube to the tune of £155m worth of investment. £1m of this was raised by Mondo, a fintech start-up that brought the crowdfunding platform to a halt when they launched on there in February 2016. It took just 1 minute 36 seconds for £1m worth of funding to be pledged for the mobile-first bank who are trying their best to re-invent banking for the modern age.
Another crowdfunding success story involves Mexican chain restaurant Chilango, who raised funds to help them to open new restaurants outside of London. At the time of writing their first restaurant outside of the capital has just opened in Manchester, with the promise of free food on the opening day bringing the crowds in their masses! Their successful campaign, cleverly dubbed “The Burrito Bond” led to Chilango being named as one of Britain's Most Disruptive Entrepreneurs in 2014. They also featured on a number of high profile TV and online video segments talking about their innovative capital funding route.
Many other businesses have successfully utilised crowdfunding for their business efforts and surely many that haven't yet used it are looking for ways to implement it in upcoming projects.
It's hard to exactly say what lies in the future for crowdfunding, but is it really that hard to imagine pillars of the financial industry such as mortgages or loans relying heavily on crowdfunding in the next 10 years? Of course, Peer-to-Peer lending does already exist but it's not quite broke in to the mainstream banking system yet, with the first peer to peer ISAs launching just this year.
Crowdfunding is definitely an industry to keep an eye on over the coming months to see how it alters further business around it!