Crowdfunding is where a large number of people pool their money together to back an idea or business, typically via an online platform.
Some of the more popular crowdfunding models include reward-based, donation-based, micro-lending, peer-to-peer, peer-to-business and equity.
About equity crowdfunding
Equity crowdfunding enables startup, early and growth-stage businesses to raise finance from a ‘crowd’ of everyday investors, professionals, angels and venture capital firms, in return for an equity stake in the business.
With equity crowdfunding, a business generally has some traction and is looking to raise anything from £50,000 to around £4m (€5m under the current EU Prospectus rules) or more under a Prospectus.
Equity crowdfunding as an industry, over its six-year lifetime, has raised about £600 million in the UK, with close to half of that having been raised by Crowdcube. Equity crowdfunding facilitates investment in return for a pro-rata equity stake in the business. The type of businesses available for investment through equity crowdfunding is increasingly diverse making raising finance accessible to a range of businesses irrespective of stage or sector.
Investments can be made from as little as £10 with no maximum in place, making it increasingly accessible to your customers, which typically culminates in pro-rata ownership of the company via ordinary or B investment shares.
You can check if your company may be eligible by creating an account and registering your interest here (it takes just a few minutes).
You can find out more about different finance options for your business by our recommended articles:
If you would like to find out more about the different crowdfunding models, read our in-depth blog here.
If you want to find out about financing your business and the options available, take a look here.