In 1997, both the Internet and crowdfunding were new concepts in the UK. Crowdfunding originally gave business owners who were frustrated with the application process and structure of traditional bank loans the opportunity to raise funds according to their own terms. A donation in exchange for a tangible reward as well as peer-to-peer funding were the most common types of early crowdfunding. Eventually, the practice expanded to include equity crowdfunding. The companies highlighted below represent both ends of this spectrum.
Assetz Capital: From Peer-to-Peer Funding to Offering Equity Capital Opportunities
Although it did not launch to the public until 2013, Assetz Capital began planning its peer-to-peer lending services in 2010. The company’s purpose in doing so was two-fold. First, it wanted to offer businesses alternative lending solutions and help re-start the British economy. Secondly, Assetz Capital desired to help make permanent changes to the business lending industry.
After quickly growing its revenue by 300 percent per annum, the company leadership decided to venture into equity crowdfunding. Upon announcing the opportunity to invest in Assetz Capital, the company surpassed its original equity allocation of £2m in under three days. A short time later, 800 new investors helped it surpass its £3m allocation. Assetz Capital currently plans to double its staff, a move that will allow it to expand the equity crowdfunding program even more over the next 12 to 18 months.
Bitcoin Foundation: Using Crowdfunding to Rescue a Struggling Company
Bitcoin Foundation, a large UK company that exists to promote the development of digital currency, is counting on crowdfunding to help turn its financial situation around. The company found itself in a serious financial predicament after the value of its bitcoin holdings dropped across England and Wales. Bitcoin Foundation must also repair its reputation after several board members quit and one of the founding members was convicted of financial crimes.
Bruce Fenton, the new company president formerly employed as a stockbroker at Morgan Stanley in the US, plans to set up crowdfunding accounts to allow people in corporate and private society to contribute financing for the company’s comeback. He states that he is confident that crowdfunding will eventually enable Bitcoin Foundation to operate at a surplus.
The Future Looks Bright
The organization UP, which acts as a clearinghouse of information for everything related to crowdfunding, made the following predictions in December 2014:
- UK government support continues to increase, including introduction of P2P lenders tax relief
- Mainstream companies and banks are entering the crowdfunding scene
- Loan-based crowdfunding will become more common
- Alternative financing will grow at a rate of 200 percent annually
As the numbers from the first quarter of 2015 come in, it is clear these predictions were quite accurate.
To learn more on how to start crowdfunding your invention idea in the UK visit, https://www.innovate-design.co.uk/crowd-funding/.