CROWD FUNDING.

[cicero]

Hi, What do people think of the practise of crowd funding.

[Wheelsup]

It depends what the cash is to be used for. If its to raise cash for a life-saving operation then I have no objections. I would possibly support  one for a  community venture, where by all proceeds are for the benefit of the entire  community, or the children thereof.

I wouldn't support crowd-funding for a private business, however. (is that even legal)  That is what shares and shareholders are for.

[MuckleJoannie]

You can crowdfund for shares.

 

https://www.syndicateroom.com/investors/what-is-equity-crowdfunding

[Davie P]

I'm up for the principal of helping new business ventures with a bit of an upfront cash injection in exchange for a special offer, but some of the recent crowdfunding campaigns for local catering businesses seem to be a poor deal - in effect they're asking for a donation to their commercial business in exchange for something you'd be able to buy more cheaply once they're trading.

 

But it's up to the individual as to whether they part with their cash.

[Nigel Bridgman-Elliot]

I think they are an excellent solution, no more being under the thumb of whether a handful to choose from banks will lend you some money, or will that venture capitalist think you are going to make them enough money quickly enough.. (Often, they are only interested once you have built something, and have customers, and then want a very large slice of the pie..)

 

I especially think its a good way to avoid shares, shareholders and risky takeover situations developing, you can keep your company private and choose what direction you and your customers want, rather than what someone else might consider the most profitable direction to take, in their own self interests at times..

This can also be a way to avoid having the profits sucked out of the company.

Can be a good way to test the market as well, eg. if you don't get the fulll amount you want, then you don't go ahead with it !

 

I do notice though people have a tendancy to fund those with good PR video's, over those that do not..

And if you ask for less than £20,000 you are more likely to get it than asking for more. (Unless you really need several million for your venture, and even then, people have funded £200 Million just for a computer game !)

Related link:

https://en.wikipedia.org/wiki/List_of_highest_funded_crowdfunding_projects

Along with crowd funding there are also Credit Unions, and Microfinance loans. (Though in the UK we appear only to have Credit Unions, and they don't appear to give out loans easily..)
 

Related link:

https://en.wikipedia.org/wiki/Microfinance

I hear if you crowd fund for a business, you have to pay some 20% tax on the money you raise !

So you probably want a good accountant.

And ask for 20% more than you think you need to cover that.

 

[George.]

I think they are an excellent solution, no more being under the thumb of whether a handful to choose from banks will lend you some money, or will that venture capitalist think you are going to make them enough money quickly enough.. (Often, they are only interested once you have built something, and have customers, and then want a very large slice of the pie..)

Why use a High street bank when they are very selective as to who they will lend to - and then charge a fortune in interest?. Use open-scource or P2P for saving and lending. Savings get more interest while borrowers are charged less.

 

Have a look at Zopa