Crowdfunding for StartupsSimilar to peer to peer lending, crowd funding is another relatively new method of funding businesses, particularly start ups. Various websites such as Kickstarter and Crowd Cube have popularised this avenue for funding, and there have been a number of successful fundings through these sites.
For a business to be successful in raising funds in this route, it is important to decide whether you will raise funds on the back of a promotion (such as seen on Kickstarter) or by issuing an equity share to the fund. Many businesses, particularly those producing gadgets, have been able to fill their order books by offering their products for a discount, together with limited edition “early bird” versions for the early adopters at a premium price. These pre-orders have enabled them to raise their funding requirements without giving away any equity whatsoever.
Not all businesses are as glamorous as some of the innovative technology companies, and as such a share of equity might be a necessary evil to raise the necessary funds.