1. Why not join the crowd and
discover the new way to fund your
growth?
An overview of UK Crowdfunding
Alan Scrase
21st March 2013
1
2. Context
• SETsquared Partnership - the Enterprise collaboration of the
Universities of Bath, Bristol, Exeter, Southampton and Surrey
• Approximately 7,400 academics working at these universities are
responsible for ten per cent of the UK's Higher Education research
budget
• Partnership formed in 2002 led by Southampton with Bath, Bristol
and Surrey (Exeter joined in 2011)
• Funded under Higher Education Innovation Funding until 2015
• Collectively supports the growth and success of new business
opportunities through spin-outs (20%), spin-ins (80%), licensing,
acceleration and incubation
3. The SETsquared approach
• SETsquared approach
– Review and apply to enter
– If accepted then
• Work with Centre staff
• Appoint mentor
• Regular Business Review panels
• Aim to assist high-growth and innovative companies with
– business planning
– management team development
– Securing funding
• Grants
• Banks
• Investment including crowdfunding
4. UK has a wealth of entrepreneurial
talent
• UK has lots of great ideas
• Need to cultivate ideas into the next
Google/Twitter/GroupOn
• Often stifled by access to Money
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%
5. The way it is…
• Grants complicated and time consuming
• Debt finance hard to come by
• 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 a business angel?
6. 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
• Social Media
• Crowdfunding examples
• Kiva.org - $325m funding raised, >777,000 lenders, ~800,000
entrepreneurs
• Kickstarter.com – >24,000 projects funded, > $250m pledged
to-date, 2m people have pledged
7. Equity Funding Gaps
£100k £1m £2m
• Most fundraising to date in lower gap but rapidly growing
• Model has shown potential to raise larger amounts
• Participation of larger investors
8. Annual growth in the number
of crowdfunding platforms worldwide
In 2011 453 platforms raised $1.5 billion
in project and business financing
Source: Crowdsourcing.org
10. Risk-Reward profile
where crowdfunding may fit
• Mix of motivations for investing
• Financial and non-financial returns
• Model’s suitability for social ventures
18. Crowdcube Equity Crowdfunding
• Crowdcube provides a FSA approved web-based central hub for
entrepreneurs to meet micro-investors. It uses the power of
Crowdfunding to provide a unique service to two types of people:
• for entrepreneurs to source equity funding more accessibly than
conventional routes
• for smaller investors to have the opportunity to invest in exciting
high-potential businesses
“$100 invested in Microsoft at their IPO would now
be worth approximately $35k.”
23. Crowdcube to date
Success so far…
Deals successfully funded
£5.1 million 35
funded so far…
£100,000 >30,000
largest single investment members
£2,547 £1 million
av. investment FSA Authorised
biggest deal
25. Regulation
• Important to ensure investors are protected
• JOBs Act is one option but not necessarily the best one
• EU looking at options
• UK FSA have started approving already
• Need for more transparency and consistency across
Europe
26. Process challenges
• Flexibility around valuations
• Collaboration between investors
• Investor transparency and signals
• Using online tools to aid in fraud detection
and business evaluation
27. 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
29. Alan Scrase
SETsquared at the University of Southampton
Incubation Centre Manager
a.scrase@soton.ac.uk
07825 761 652
Notes de l'éditeur
Welcome My name is and I am…
Just to set it in context
Our approach ..
The UK but….
Where we are..
Kiva - Despite being only 39 months old it has raised over $87m, funding over 213,000 entrepreneurs. They have over 500,000 lenders worldwide. Ebbsfleet United Football Club was bought by approximately 26,000 people each paying £35 - £910,000 Zopa - have over 300,000 members and total disbursals have reached £50m.
Ignoring bank borrowing for now
Introduction pages with video
Chance to contribute small amounts for set package
And for larger amounts. Possible to become dealers or agents
Way to introduce small amount lenders to viable propositions
Lender controls who and how much and the rate
Business gets funding at a the best rate from the offers received
Process
Have to take a questionnaire as potential investor to prove you are en “educated investor”
Detailed “online prospectus”
Use video to promote and therefore “meet” the team