The increasing scope and scale of what can be crowdfunded

5 minute read

Crowdfunding is a way to finance your business through, loans, donations or exchanging money for rewards or shares. You generally do this through a crowdfunding website. You’ll need to post your business idea (as a campaign) on the website. People can then support your campaign by contributing money to help you achieve your goal. On some websites, you’ll set a goal for the amount of money you need, and when you want to reach this goal by.

A quick scan across the different crowdfunding platforms and the projects they help get funding illustrates the diversity of what the crowd can finance. Uses of crowdfunding vary from funding video games to organic bakeries. Some areas we see crowdfunding having a significant impact include:

Crowdfunding creative and cultural industries: The creative industries were the driving force behind the rise of crowdfunding. Kickstarter and Indiegogo, arguably the most popular crowdfunding platforms, still focus mainly on creative projects, such as video games, photography or new design products. There are, however many more platforms concentrating on creative projects, many operating in specific niches such as publisher Unbound and unglue.it who are focusing on removing copyrights on books or emphasis is who focuses purely on funding photography projects.

Crowdfunding private business: Crowdfunding also allows for investing in, and lending to private businesses. Through equity crowdfunding platforms like Crowdcube and Seedrs, people have the opportunity to get an equity stake in innovative UK businesses like Escape the City and DigitalSpin in exchange for contributing funds. Other platforms offer the opportunity to access crowdfunded loans. FundingCircle has thus far facilitated approximately £100 million in lending to more than 1,700 UK businesses offering interest rates of around 9 per cent to lenders before fees.

Crowdfunding public and social projects: Civic crowdfunding is generally being used as a catch-all term for projects with a public or social focus, and is another application that has the potential to disrupt how money for charitable causes is sourced and how public services and spaces are used and paid for. The Luchtsingel footbridge in Rotterdam (in the Netherlands) is one early example of how local people crowdfunded a public good project, in return for getting their names on one of the 17,000 planks used to build the bridge. Spacehive in the UK has been pioneering co-investment models between the crowd, private sector, and public sector investors, with early successes like the Glyncoch Community Centre. While the majority of civic crowdfunding happens on the periphery of public services the Citizinvestor platform in the US has begun experimenting with integrating a crowdfunding into how the city of Philadelphia commissions and funds new public projects. Civic crowdfunding has also been proven as a new way of financing projects that have their origin in the third sector. Platforms like Peoplefund.it, SolarSchools and Buzzbnk are all examples of UK–based platforms that support projects with a social objective and are proving innovative models of encouraging more giving in society.