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BLOG - Crowd Funding: What do you need to know?

What do Scottish charity, MyParkScotland, Tennis pro Andy Murray and Websters Glasgow Theatre have in common?

All are Scottish entities who are involved or have benefited from the innovative concept of ‘Crowdfunding,’ a private equity scheme which encourages large groups of individuals to make small investments by using online platforms. The main goal? Raising finance for local community projects, charities and businesses, specifically start-ups, new companies and entrepreneurs.

How does it work?

Often start-ups struggle to raise finance through traditional loan funding methods, such as bank finance or government grants. Crowdfunding is an alternative option which allows you to effectively pitch your business idea online, summarising what you want to achieve through investment, what you want to raise and your proposed percentage share of the business for investors. As with all online platforms, Crowdfunding is a perfect way to raise awareness for your business idea, grow your network through your investors and their connections, while avoiding upfront fees.

Our top tips before pitching your idea online would be to ensure that your business idea is protected with a patent or copyright, as otherwise, the risk remains that another Crowdfunder could adapt your concept as their own. You should also consider the Crowdfunding model you want to adopt: Equity, Debt, or Reward; and you will want to have a clear and straightforward concept for investors with evidence of early stage development to attract funding and support from the outset.

Want to know more?

To get started, we would advise that you check out the directory of Crowdfunding platforms on the CrowdingIn website to assess what suits your business needs best. A member of Pagan Osborne’s Commercial and Business Services team would be happy to provide tailored advice on your business idea and the best Crowdfunding option for you.

Amy Alexander, solicitor, Commerical & Business Services team

 

If you'd like to learn more about crowdfunding or starting up a business email Amy or call 0131 624 6829 and ask about our free 360 Business Review service.

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