Crowdfunding is booming – but it’s changing too

Back in 2016 there was a slight dip in the number of crowdfunding deals causing speculation as to whether crowdfunding was plateauing as a route to investment. However, according to recent research from Beauhurst, the sector has “bounced back” in 2017 – particularly in the final quarter of 2017.

Crowdfunding deals in 2017
Source: Beauhurst “The Deal”, Feb 2018

Looking at the investment sector as a whole, in terms of the number of deals done, crowdfunding remains a strong source of funding in UK. Indeed, crowdfunding offers one of the strongest routes to funding, second only to Venture Capital/Private Equity funding based on the number of deals funded. Crowdfunding accounts for more completed funding rounds than those funded by business angels, although business angel investment remains stable. It seems crowdfunding is here to stay and, as Beauhurst point out, “diversity of investment sources means startups have a better chance of finding a partner that suits their needs.”

Crowdfunding is raising larger investment rounds than before

Deals by investor type over time
Source: Beauhurst “The Deal”, Feb 2018

Crowdfunding is moving its focus onto larger deals and the number of crowdfunding deals under £499,000 is beginning to decline. This is in contract to angel investment which remains relatively stable at both a higher and lower level.

Angel networks and crowdfunding deals
Source: Beauhurst “The Deal”, Feb 2018

Different crowdfunding platforms are adopting different approaches

As the equity crowdfunding market matures distinctions are becoming clearer in terms of approach. Crowdcube and Seedrs are working to a volume model and encourage a broad mix of investors. Syndicate Room and Venture Founders, on the other hand, seem focused on doing few deals but with a higher average amount invested. Both Syndicate Room and Venture Founders attract a particular type of investor – mainly High Net Worth (HNW)or sophisticated investor who, arguably, have the ability to invest more.

Major crowdfunding platforms 2017
Source: Beauhurst “The Deal”, Feb 2018

New players entering the market

This month (March 2018), OurCrowd, a global equity crowdfunding platform have announced they are opening an office in the UK. Their approach is similar to that of Syndicate Room and Venture Founders and focuses on attracting HNW and sophisticated investors.

What are the implications for startups, business owners and founders?

Crowdfunding remains a strong route to funding but it does take hard work and a lot of preparation behind the scenes to run a successful crowdfunding campaign. As the crowdfunding platforms focus their efforts on larger deals, businesses looking to raise relatively small amounts of seed investment (less than £250,000) may find they receive less help and support on a one-to-one basis from their chosen crowdfunding platform. Businesses are advised to look to alternative, independent programmes and advisors to gain this support instead. There are a number of such programmes. Good ones include Crowdfunding Accelerator, TribeFirst and IdeaSquares.

Angel investment remains an important plank in any seed investment round – for two reasons. Angels are still actively investing in smaller rounds, as the Beauhurst data shows, but also a lead angel investor can provide access to crowdfunding platforms like Syndicate Room who won’t accept any business unless they have secured a lead investor.

***********

Is your Startup ready for investment?

Take the Startup Investment Scorecard to discover if your Startup is ready for investment. Start here

Latest Blog & News

problem and solution slide banner.

How to show the problem and solution slides in your pitch deck with a customer journey

Framing the issue – or societal/customer problem – that your startup is tackling, and how it solves that issue, acts as a hook to
Funding for startups: How to raise bridge funding.

Funding for startups: A guide to bridge funding

Pre-Seed, Seed, and Series A are all terms that are probably familiar to you if you have, or are looking to, raise funding for
Redefining angel investment for female founders

Female Founders: Redefining angel investment to inspire inclusion

Friday (8th March) marks International Women’s Day (IWD) with this year’s campaign theme being ‘InspireInclusion’. I can’t help but feel despondent though, last year
What angel investors look for in startups.

What angel investors look for in start-ups

Angel investors play an important role in the growth and expansion of startups. According to the 2021 Scale-Up Institute Annual Review on the State
Pitch deck: Go to market slides banner.

Pitch deck: How to include your go-to-market strategy

A ‘Go-to-market’ (GTM) strategy is a must-have in any pitch deck. It’s where founders showcase their approach for entering their market successfully, and the
Startups Magazine article: How to build confidence before pitching for investment.

How to build confidence before pitching for investment

Presenting is often cited as most peoples’ “greatest fear”. It’s unsurprising then that founders often lack confidence when pitching, especially if pitching is new
Future-proof your startup with engagement marketing.

Master engagement marketing: and you’ll future-proof your startup

Investors expect a clear, well-targeted startup marketing strategy if you are going to attract their investment. But, pre-funding when you are still in “hustle
Startups Magazine: Networking with startup investors banner.

Networking with startup investors: 5 tips to network successfully

Raising equity investment becomes easier when you pitch to startup investors you have previously engaged with or spoken to, or have been introduced to.
Looking for startup investors? Our guide will help

Looking for funding? Here’s your step-by-step guide to finding startup investors

Starting a business is exhilarating, but finding the startup funding to fuel your dreams can be a daunting task. Not only will you have
Startup Funding: A guide to navigating the funding journey

Startup funding: A guide to navigating the funding journey

One of the most frequent questions we are asked is “What’s the best way to fund my startup?” Startup funding doesn’t have to mean
Hatty Fawcett, Finalist in the Great British Entrepreneur Awards 2023

What being a finalist in the Great British Entrepreneur Awards has taught me

My weak spot is I don’t like talking about my achievements. I think it dates back to my childhood when I was told not
How to choose your cofounder

Choose your startup co-founder wisely

So you’ve had a light-bulb moment, a world-changing idea – you’re excited and want to share it with the world. But where do you
Whats the best way to fund my business

“What’s the best way to fund my business?”: Ten founders give the lowdown on the best way to fund your business

One of the fundamental questions, and perhaps the most frequently asked when it comes to business growth, is “What’s the best way to fund
Funding Accelerator Mentor Elliott Gaspar explains what investors look for in a financial forecast for investors

3 Things Investors Look for in a Financial Forecast: The Perfect Blend

Much like brewing a delicious cup of coffee, a compelling financial forecast for investors requires a complex blend of data, strategy, and storytelling. It’s
How equity investors can better support underrepresented founders

How equity investors can better support underrepresented founders

Raising equity investment is a challenge for any startup, but especially for underrepresented founders. They don’t just face “the usual” questions about their business,
Raising investment in difficult economic times

Raising investment in difficult economic times

It’s tough raising investment right now. There are fewer investors and the amounts being invested are smaller. How should startups respond if they still
Jennifer Anderson explains how to weave storytelling into your pitch deck to keep investors' attention

How to weave storytelling into your pitch deck to keep investors’ attention

As founders we’re told to weave storytelling into our pitch deck, but we are not always told why. Luckily Pitch Coach and Funding Accelerator
Is equity funding the best option for your startup

Is equity funding the best option for your startup?

Equity funding isn’t for everyone. When you sell shares in your business you are, effectively, entering into a long-term relationship with your investors. Investors
Funding Accelerator mentor Tracey Rob Perera shares 3 things angel investors look for in your startup valuation

3 things angel investors look for in your startup valuation

Funding Accelerator mentor, Tracey Rob Perera, shares 3 things angel investors look for in your startup valuation. Tracey Rob Perera is not only a
Hatty Fawcett talks to Finance Digest about how - and why - to build productive relationships with your investors

How to build productive relationships with investors

You might think closing a funding round is the end of a journey. In fact, its just the start! Now comes the hard work
Funding Accelerator Mentor Chris Booth shares how to expand your team without it costing more

How to expand your startup team without it costing more

Funding Accelerator expert mentor Chris Booth of Findrs explains how to expand your startup team (and extend your headcount budget) by using AI. When
Hatty Fawcett Adviser of the Year 2022

Start-up funding adviser, Hatty Fawcett, wins Enterprise Nation Adviser of the Year 2022/23

Over the last few months, start-up founders and small business owners across the UK have been voting for the best and brightest business advisers.
How startup accelerators increase your chances of funding

How startup accelerators increase your chance of funding

While I’ve written before about the benefits of joining startup Accelerators (find out more here), now seems like the perfect time to revisit the
unit metrics that attract startup investors

3 unit metrics that attract startup investors and build a compelling story of growth

Did the conversation with potential investors fizzle out at the financial stage? It’s not just the vision, but the focus on detail that secures
Panel members at How to find and impress investors June 2022

How to find investors, and impress them

Have you ever wondered what it takes to find and impress investors? Well, who better to ask than leading VCs and angels themselves! Earlier
financial-forecast-charting-growth-1200-1

Investing your time where it counts – the numbers

How the right financial forecast is crucial to unlocking startup investment If you’re looking to secure startup investment, it’s inevitable that at some point
Find-investors-by-Herbi-B-from-pixabay

How to find investors for a startup…quickly!

A recent report from Beauhurst and SFC Capital* reveals that it takes, on average, 15 months to find investors for a startup and close
Should you raise startup funding from family and friends no words

Should you raise startup funding from friends and family?

So you think you need to raise funding for your startup? You may be right, but before you begin to raise startup funding from
7-Essentials-that-unlock-startup-equity-investment-600

7 Essentials that unlock Start-up equity investment

Start-up equity investment: Investors look for 7 Essential ingrediants when deciding whether to back a start-up – or not! Be succinct to get attention
Financial savings mechanism. Piggy bank formed by gears and cogs

Traction makes it quicker to raise funding for a startup

So you want to raise funding for a startup? To succeed, you’ll need to speak the language of investors. Investors will ask “how much
7 mistakes that stop you raising investment for your startup no words

7 Mistakes that stop you raising investment for your startup

Startup founders are resourceful and move quickly but sometimes that haste can work against them. They make mistakes. When it comes to raising investment
Doors within doors kilarov-zaneit-KjqNGd0sCTQ-unsplash

Why your executive summary is your most important investment document

When seeking investment for your business it pays to think like an investor, giving an investor the information they want rather than telling them