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Crowd funding 21 march 2013


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Crowd funding 21 march 2013

  1. 1. Why not join the crowd anddiscover the new way to fund yourgrowth?An overview of UK CrowdfundingAlan Scrase21st March 2013 1
  2. 2. Context• SETsquared Partnership - the Enterprise collaboration of the Universities of Bath, Bristol, Exeter, Southampton and Surrey• Approximately 7,400 academics working at these universities are responsible for ten per cent of the UKs Higher Education research budget• Partnership formed in 2002 led by Southampton with Bath, Bristol and Surrey (Exeter joined in 2011)• Funded under Higher Education Innovation Funding until 2015• Collectively supports the growth and success of new business opportunities through spin-outs (20%), spin-ins (80%), licensing, acceleration and incubation
  3. 3. The SETsquared approach • SETsquared approach – Review and apply to enter – If accepted then • Work with Centre staff • Appoint mentor • Regular Business Review panels • Aim to assist high-growth and innovative companies with – business planning – management team development – Securing funding • Grants • Banks • Investment including crowdfunding
  4. 4. UK has a wealth of entrepreneurialtalent• UK has lots of great ideas• Need to cultivate ideas into the next Google/Twitter/GroupOn• Often stifled by access to Money Google says searches for "business plan UK" have increased by 60% over the past year and searches for "small business loan" are up by 34%
  5. 5. The way it is…• Grants complicated and time consuming• Debt finance hard to come by• Venture capital difficult to find for smaller requirements• Business angels – limited investments • Typically a syndicate each investing £10k - £100k• Is there a way to have 5000 angels each investing £10?• What if anyone could become a business angel?
  6. 6. Crowdfunding• Crowdfunding is an approach to raising the capital required for a new project or enterprise by appealing to large numbers of ordinary people for small amounts• Social Media• Crowdfunding examples • - $325m funding raised, >777,000 lenders, ~800,000 entrepreneurs • – >24,000 projects funded, > $250m pledged to-date, 2m people have pledged
  7. 7. Equity Funding Gaps £100k £1m £2m• Most fundraising to date in lower gap but rapidly growing• Model has shown potential to raise larger amounts• Participation of larger investors
  8. 8. Annual growth in the numberof crowdfunding platforms worldwide In 2011 453 platforms raised $1.5 billion in project and business financing Source:
  9. 9. Crowdfunding Types
  10. 10. Risk-Reward profilewhere crowdfunding may fit• Mix of motivations for investing• Financial and non-financial returns• Model’s suitability for social ventures
  11. 11. Kickstarter Project Crowdfunding
  12. 12. Kickstarter Project Crowdfunding
  13. 13. Kickstarter Project Crowdfunding
  14. 14. FundingCircle Loan Crowdfunding
  15. 15. FundingCircle Loan Crowdfunding
  16. 16. FundingCircle Loan Crowdfunding
  17. 17. The stages of equity crowdfunding
  18. 18. Crowdcube Equity Crowdfunding• Crowdcube provides a FSA approved web-based central hub for entrepreneurs to meet micro-investors. It uses the power of Crowdfunding to provide a unique service to two types of people: • for entrepreneurs to source equity funding more accessibly than conventional routes • for smaller investors to have the opportunity to invest in exciting high-potential businesses “$100 invested in Microsoft at their IPO would now be worth approximately $35k.”
  19. 19. Crowdcube Equity Crowdfunding
  20. 20. Crowdcube Equity Crowdfunding
  21. 21. Crowdcube Equity Crowdfunding
  22. 22. Equity crowdfunding benefits
  23. 23. Crowdcube to dateSuccess so far… Deals successfully funded £5.1 million 35 funded so far… £100,000 >30,000 largest single investment members£2,547 £1 millionav. investment FSA Authorised biggest deal
  24. 24. Some challenges• Regulation• Process challenges• Post-investment• Getting the best participants• Potential returns
  25. 25. Regulation• Important to ensure investors are protected• JOBs Act is one option but not necessarily the best one• EU looking at options• UK FSA have started approving already• Need for more transparency and consistency across Europe
  26. 26. Process challenges• Flexibility around valuations• Collaboration between investors• Investor transparency and signals• Using online tools to aid in fraud detection and business evaluation
  27. 27. Post-Investment• Managing input from many investors• Incentivising investors with small stakes• Protecting investors post-investment• Voting rights• Exploring liquidity for investors• Ensuring businesses remain attractive to follow-on funders
  28. 28. UK Crowdfunders
  29. 29. Alan ScraseSETsquared at the University of SouthamptonIncubation Centre 761 652