Why Crowdfunding for Startups UK?
The volume of new businesses grows every year and many are turning to crowdfunding in order to scale their startup. Currently, around 6 million businesses exist and about 75% are service industries. Since 2000, there has been a record growth in solo companies of 82%. These are businesses without employees [1]. Mainly due to many Brits choosing to shun the norm of being employed 9-5 and instead, working for themselves.
The fast growth of the internet has a lot to do with rising population venturing out on their own. The number of people shopping online has seen many shops close down and as a result, many are reluctant to spend money on premises. Opportunities have emerged for e-commerce stores and global warming has an effect. Choosing homes as a place to work reduces the carbon footprint of travel. Combined with other commuting issues to consider, such as balancing the expensive travel prices with higher living costs.
Juxtaposingly, workers who need to travel – such as manual labourers, are seeing the benefits of being self employed and starting up ventures in order to be their own boss.
Even on low cost basis, new businesses need funds to start. A great idea requires promotion. Customers can’t find you without some form of advertising. The media is a marvelous tool for reaching out but highly competitive with over 400,000 business startups every year. A huge competition trying to make their mark.
Designing or developing a new product requires greater funds. An amazing idea is just an idea, without the provision of machinery and materials. Whatever reasons for financing, securing money prevents many from taking a leap into their chosen marketplace. The reduction of banks offering support and high interest rates mean people look elsewhere. The popularity of television of programmes, like Dragon’s Den, sparked the country’s interest in alternative funding.
Positives of Crowdfunding
The staying power of a business seems linked to initial funding. About 80% of startups fold in the first year. Probably because of the problem of struggling to repay banks, as a significant number started with crowdfunding financing, actually survive. The trend means there are about 37,000 crowdfunding campaigns running. The UK is leading Europe in this activity and increasing on average by 15% each year.[2]
Historically, only wealthy people invested in startup projects but accessibility to the masses arrived with crowdfunding. Low interest rates at banks makes people wonder why save with them. House prices are still rising rising but much slower than before and no longer give short term investment possibilities. So investing money with other return opportunities makes sense. Modern use of the internet for online transactions, opens up the realm to amateur investors, making crowdfunding a fast growing sector.
Types of Crowdfunding
There are many reasons to begin a crowdfunding campaign and several platforms to choose from. Many well known sites facilitate matching entrepreneurs with alternative funding sources. Altogether securing over £217 million for UK businesses in 2017 and the most raised by just one business was a Scottish brewery, achieving £25 million.[3]
Success stories have increased the desire in crowdfunding for startups UK. Meaning not only for financing, but the media hype that accompanies. Fuelling public interest in a new idea tests the market and helps promote. Another longevity string! Crowdfunding harnesses social media as a way to interact with the general public.
Also the fact of encompassing many fields of business, from technology to arts and crafts, includes a wide range of markets. Campaigns for small to large amounts are possible and returns of equity or bonds the norm.
Platforms of Crowdfunding for Startups UK
1. Crowdcube
2. Seedrs
3. Kickstarter
4. Indiegogo
These are the main 4 platforms and choices between which one to use vary. All focus on connecting you with backers, though the success of your campaign is really up to you. Attracting public interest and keeping it has major importance. So not just the strength of your idea but how to create a big impact on a market swamped with new businesses, all looking for funding.
Steps to Achieving Crowdfunding
1. Pitch and Social Marketing
2. Video
3. Investor Accelerator
Knowing the tone of voice and the right words is critical when writing a pitch. Pitching your idea and asking for money. A begging approach puts people off as does a bragging know-it-all. A fine line between being humble and being assertive.
To help you with this aspect, Drop Studio’s expert team knows how and gives you all the tools needed to reach and surpass your funding target. With an accelerator program to guide and support you by planning, managing and optimising your campaign.
Visibility is the key to success. Another string to our bow is our ability to produce professional videos which enhance your idea and help you stand out. Video creation gives your new venture a winning formula for fundraising by combining film and animation. Skillful scriptwriting produces an outstanding masterpiece.
Thirdly, our Investor Accelerator. Providing you with the tools you need to reach and connect with investors adds to the probability that your campaign will succeed if you’ve got the right investors behind your project. We’re there every step of the way, supporting you throughout your journey and helping you discover potential investors.
We have many years of working with new businesses and many success stories.