Where crowdfunding was once considered the shy route to finance or the ‘novel exception,’ it has fast become the next biggest investment trend. Its increasing popularity has seen Forbes forecast crowdfunding to surpass venture capital as a means of legitimate access to capital for entrepreneurs and investors this year.
Previously crowdfunding was only reported on a National, European or Global basis, however, the growth of this source of finance prompted the commissioning of a Scotland focused report to chart crowdfunding over the three years between 2013 and 2016.
The Scottish Crowdfunding Report 2016 has now been released to better understand the impact of this source of finance in Scotland, with the report’s key findings summarized in the info-graphic below:
Scotland is into crowdfunding in 2016
In the past 3 years, crowdfunding in Scotland has emerged as an increasingly important source of funding for businesses. The report reveals that £27m was raised across all types of crowdfunding in Scotland, representing 4% of UK crowdfunding.
The question was raised in 2013 if crowdfunding was a missed opportunity for SMEs facing challenging investment environments. However, the increase in the number of Scottish crowdfunding platforms available, and the impressive increase from just 1% to 4.5% of the UK total raised in Scotland in 2013 and 2016 respectively, would signify that this in fact is an opportunity gaining traction rather than being missed.
Interestingly though the awareness of crowdfunding over the last three years has not necessarily increased. Instead the growth in this sector is attributed to those familiar with the mechanism taking the plunge and initiating a campaign. Over 50% of companies surveyed as part of the report were willing to try a crowdfund which can be perceived as an increase in confidence as crowdfunding has become a more established and legitimate route to finance. You could also note from this finding that if general awareness of crowdfunding hasn’t increased, there is considerable opportunity for growth with the right marketing behind the sector.
Growth in crowdfunding is of course not isolated to Scotland with the UK market as a whole experiencing significant growth, attributed to this form of funding becoming more accepted across the finance industry. Raising finance is incredibly challenging for companies so it’s fantastic to see this mechanism gaining traction and giving more young companies a life line.
Given the increasing significance of this form of finance to SME’s we thought is was an ideal time to take a more in depth look at crowdfunding. Over the coming week we will look at common crowdfunding myths, strategies for crowdfunding success, and summarise the most popular crowdfunding sites to save you the time trawling them yourself! We’ll finish the week with a very special interview with #EIEAlumni16 Robotical, who are right in the middle of their own campaign so be sure to check out their real life experience!
The iV Crowdunding series will cover:
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