An overview of UK Crowdfunding

1

Alan Scrase 21st March 2013

Context

• SETsquared Partnership - the Enterprise collaboration of the Universities of Bath, Bristol, Exeter, Southampton and Surrey

• Collectively supports the growth and success of new business opportunities through spin-outs (20%), spin-ins (80%), licensing, acceleration and incubation

• Running 10 years

• Raised over £1bn investment

• 1,000 companies created with 90% survival rate

• UK has lots of great ideas

• Need to cultivate ideas into the next Google/Twitter/GroupOn

• Often stifled by access to

UK has a wealth of entrepreneurial

talent

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%

Money

• Grants complicated and time consuming

• Debt finance hard to come by

• What if a large number of people lent a smaller amount?

• 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 involved?

The way it is…

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

• Possible via the web and driven through Social Media

• Crowdfunding examples

• Funding Circle.com – 68k UK based lenders, > £220m lent, <1.4% bad debt

• Kickstarter.com – >132,000 launched projects, > $977m pledged to-date, 44% success rate

Crowdfunding Types

Kickstarter Project Crowdfunding

Kickstarter Project Crowdfunding

Kickstarter Project Crowdfunding

FundingCircle Loan Crowdfunding

FundingCircle Loan Crowdfunding

FundingCircle Loan Crowdfunding

http://www.crowdcube.com/pg/how-it-works-4

The stages of equity crowdfunding

Crowdcube Equity Crowdfunding

Crowdcube Equity Crowdfunding

Crowdcube Equity Crowdfunding

https://www.fundingcircle.com/how-it-works#how-it-works-video

Equity crowdfunding benefits

Success so far…

£18 million funded so far…

£187,000 Average amount raised

>59.7k members

Deals successfully funded

95 £1.9 million

biggest deal

Crowdcube to date

£2,400 av. investment FCA Authorised

Some challenges

• Regulation

• Process challenges

• Post-investment

• Getting the best participants

• Potential returns

Regulation

• Important to ensure investors are protected

• JOBs Act is one option but not necessarily the best one

• EU looking at options

• UK FCA have started approving already

• Need for more transparency and consistency across Europe

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

Donation crowdfunding

www.banktothefuture.com

www.buzzbnk.com

www.crowdbnk.com

www.peoplefund.it

www.gambitious.com

Debt crowdfunding

www.abundancegeneration.com

www.banktothefuture.com

www.buzzbnk.com

www.trillionfund.com

www.fundingcircle.com

Equity crowdfunding

www.banktothefuture.com

www.crowdbnk.com

www.crowdcube.com

www.gambitious.com

www.microgenius.org.uk

www.crowdmission.com

www.seedrs.com

UK Crowdfunders

Alan Scrase

SETsquared at the University of Southampton

Incubation Centre Manager

a.scrase@soton.ac.uk

07825 761 652