“Crowdfunding” capitalises on the social approach to business investments

Raising start-up funding is often the biggest hurdle to getting new business ideas off the ground so one funding website is looking to capitalise on the social approach.

‘Crowdfunding’ is the term being coined to describe the new way to raise investment presented by Crowdcube. Basically, entrepreneurs and business pioneers pitch their business ideas online in a Dragon’s Den type way and invite other like-minded folk to invest in the project, even very small amounts of cash, all in exchange for rewards and a stake in their business.

In a way it is one more step towards Capitalism from traditional co-operatives and the online micro-payment systems and social networking make it even easier for people to invest. Not only can the entrepreneurs gain investment but the project can also gain important PR and also feedback from those from the outside world.

Tiny Business Angels

If you have ever fancied yourself as a venture capitalist but never had the money to commit, Crowdcube appears to offer the chance to try your hand. A simple registration procedure and transferring some money into your secure Crowdcube account sets you up to select the project or projects you want to invest in.

Even the smallest contribution could help projects move onto the next stage and give you a small slice of what could become a very big pie. What’s more there is no limit to the number of projects you can invest in, so within minutes you could technically have a wide business investment portfolio.

Pitching for investment

As you might expect, to pitch for investment is slightly more complicated, with pitches only going live once they have been quality-controlled by the Crowdcube in-house team. Yet there can’t be many simpler ways to tout your ideas for investment than this.

Once approved you will get the chance to create on online pitch including web page, video, images and documents and then promote via Facebook, Linkedin and Twitter or via a downloadable widget to install on your own website. As an opening offer it is free to register and free to list your pitch too. Only pitches successful in reaching their target finance will have to pay (5% of the target and £1750 for legal fees).

In difficult economic times it is certainly a model that may offer a new avenue for successful finance raising.

Have you tried Crowdcube? As an investor or entrepreneur? Do you think it has a future as a finance raising method?

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Tim Fuell only joined the Webfusion team last year but having been a customer of the group for more than 10 years, he knew all about their success in the Web hosting field. After writing his Masters thesis on the threat of cybersquatting way back in 1998, he has seen the Internet grow beyond even his wildest dreams. A journalist for over 16 years and a qualified Solicitor, Tim is one of a team of bloggers in the Webfusion stable aiming to educate, inform and assist their online readership.