Raising capital for a business or expansion of an existing business through a working capital loan from a bank or an equity investment stake is a tedious and often unsuccessful process. However crowdsourcing provides an answer to this conundrum.
Money for your business can now be raised through crowdfunding which is a derivative of crowdsourcing. This is accomplished through non-profit foundations which are set-up to provide financial support to business start-ups, disaster relief, cultural events etc.
Crowdfunding is not a new concept when considering that the Statue of Liberty and many inventions by Thomas Edison are historical examples of crowdfunding. According to Steve Case of AOL, a small gift received from many is equivalent to large gifts received from a few.
Wikipedia, the best example of such a venture’s success says that people pool their money and resources through collective cooperation, attention and trust, over the internet with an intention to support the organization or institution seeking their help.
Crowdfunding has also been effectively utilized to help independent winemakers make and sell wines. The founder of Naked Wines, Rowan Gormley has been able to get over 100,000 customers who collectively invest about £1 million every month thereby helping over 22 winemakers setup an export business and produce 85 varieties of new exclusive wines which have won 37 international wine awards.
Amanda Boyle inspired by the success of crowdfunding in the music and film industry will soon be launching the first Scottish crowdfunding venture – Bloom VC. She says that the funds generated through crowdfunding cannot be classed as investment.
Everyone wins. More new businesses mean more jobs and better quality of life. It sounds like a crusade, but it actually makes a lot of economic and business sense