Want to get started with crowdfunding but don’t know where to start? Here’s some frequently asked questions answered to help you on your way
Why is crowdfunding so popular?
It’s a way to get cash into the business without giving away too much equity (and control) to a single investor.
What types of businesses are suitable for crowdfunding?
It’s generally used for early-stage businesses, though this is changing all the time. Consumer businesses with a clear, sexy proposition have historically been a shoo-in but B2B businesses that can clearly articulate the market opportunity can do well, too.
What are the drawbacks?
Managing a large number of investors can be expensive and time-consuming. Make sure you have the right infrastructure to deal with investor enquiries, updates and meet-ups.
Do you miss out on the mentoring element of traditional angel/VC investment?
Not necessarily. Many crowdfunded businesses have recruited non-executive directors and advisers through the crowdfunding process. It is a good idea to have experienced investors involved alongside the crowd.
What is the minimum amount an investor is required to pledge?
It varies from platform to platform – some ask for £10, some £1,000 minimum. The minimum amount will, of course, have an impact on the number of possible investors backing your campaign.