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Ignite your...venture crowd presentation 8 oct 2012


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NESTA will present the findings of their recently published report The Venture Crowd. Crowdfunding is big business. The idea of financing projects or businesses with small contributions from large numbers of people is catching on in a big way and now accounts for significant amounts of money. In 2011 alone, €1.5 billion was raised through crowdfunding for projects and businesses in need of funds.

Nesta is an independent charity with a mission to help people and organisations bring great ideas to life. They do this by providing investments and grants and mobilising research, networks and skills.

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Ignite your...venture crowd presentation 8 oct 2012

  1. 1. Annual growth in the number of crowdfunding platforms worldwideIn 2011 453 platforms raised $1.5 billionin project and business financingSource:
  2. 2. A Crowdfunding Typology
  3. 3. Equity gaps• Most fundraising to date in lower gap• Model has shown potential to raise larger amounts• Participation of larger investors
  4. 4. Business risk-reward profile where crowdfunding mayfit• Mix of motivations for investing• Financial and non-financial returns• Model’s suitability for social ventures
  5. 5. Some challenges• Regulation• Process challenges• Post-investment• Getting the best participants• Potential returns
  6. 6. Regulation• Important to ensure investors are protected• JOBs Act is one option but not necessarily the best one• Need for more transparency and consistency across Europe
  7. 7. Process challenges• Flexibility around valuations• Collaboration between investors• Investor transparency and signals• Using online tools to aid in fraud detection and business evaluation
  8. 8. Post-Investment• Managing input from many investors• Incentivising investors with small stakes• Protecting investors post-investment• Voting rights• Exploring liquidity forinvestors• Ensuring businesses remainattractive to follow-on funders
  9. 9. Getting the best participants• What businesses are suited to the model• Getting experienced/serial entrepreneurs• Attracting more experienced investors – The potential of co-investment
  10. 10. Potential returns• VC returns since dotcom have been poor• Some evidence angels doing better• But tax schemes helpboost real returns