This article provides a comprehensive review of the best UK crowdfunding platforms.
It also discusses crowdfunding, types of crowdfunding, its difference from fundraising, and the benefits of crowdfunding.
The crowdfunding industry in the UK is booming. P2PMarket Data ranks the United Kingdom as the third biggest crowdfunding market in the world, behind only China and the United States.
It’s far easier to establish a business now than it was even a decade ago. Anybody may quickly and easily get started raising money from the general public using crowdfunding websites.
If you are looking to launch a new project and build a community around it, as well as raise funds for your business, there are a number of online resources you may explore.
If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).
What Is Crowdfunding?
Crowdfunding is a method of acquiring financial backing for endeavors. It allows fundraisers to collect money from a considerable number of individuals using internet channels.
Businesses in their early stages or in need of capital expansion frequently turn to crowdfunding. It’s a creative strategy for raising capital for unproven endeavors.
It may also be a technique for developing a community around your product. You may expand your consumer base and learn more about the industry by tapping into the potential of the online community.
Platforms for crowdsourced financing allow fundraisers to connect with donors online.
The crowdfunding platforms serves as a collection point for monetary commitments.
The best UK crowdfunding platforms frequently pay fundraisers a fee if the fundraising campaign has been successful. Crowdfunding platforms owe their users a safe and straightforward experience.
The funding model used by many platforms is either all or nothing. This means that if you meet your aim, you receive the money, and if you don’t, everyone gets their money back – no hard feelings and no financial loss.
There are a lot of types of crowdfunding, which are detailed below.
What Are The Types Of Crowdfunding?
Reward, debt, donation, and equity crowdfunding are the four main types of crowdfunding. Check out each campaign type below.
Reward Crowdfunding
Crowdfunding for rewards is people making contributions to a company in return for a specific reward or incentive. Often, the prize entails anything associated with the goods or services that your company provides.
Companies that sell items and other physical objects benefit most from reward-based crowdfunding. Also, it could be helpful for new businesses searching for a test market for their goods or services.
Debt Crowdfunding
Debt-based crowdfunding involves the campaign manager borrowing funds from donors. People consent to loan money to an organisation. Businesses consent to repay lenders in exchange.
In most cases, company owners specify the length of time it will take to reimburse contributions and factor in interest charges.
Debt crowdsourcing may be used by entrepreneurs who don’t want to give up firm stock.
Donation Crowdfunding
Donation crowdfunding is a type of campaign where there is no financial return to investors or contributors. Donations are made by individuals to support a particular cause or idea.
Typical donation-based crowdfunding activities include raising money for charities, organisations, or disaster relief operations.
For instance, a corporation may contribute to a good cause by making monetary contributions.
Equity Crowdfunding
Crowdfunding for equity allows people to make genuine investments in small businesses.
Contributors may exchange money for equity shares to become a part-owner in your company.
Equity crowdfunding essentially enables you to donate a portion of your ownership to a donor.
With a distribution or dividend, your donors get a cash return on their investment and a cut of the earnings.
Campaigns for equity-based crowdfunding are popular among business owners and startups seeking an alternative to venture capital investments.
What Is An Example Of Crowdfunding?
Several of the goods and companies that were crowdfunded on Kickstarter went on to become very successful ventures.
For instance, Oculus VR, an American firm focusing on virtual reality hardware and software solutions, was financed via the site.
In order to provide developers access to virtual reality headsets made for video games, inventor Palmer Luckey started a Kickstarter campaign in 2012.
Ten times the initial $250,000 target, the campaign received $2.4 million in crowdfunding.
Oculus VR was purchased by Facebook, now known as Meta (META), in March 2014 for $2.3 billion in cash and stock.
M3D, a company that manufactures small 3D printers and was started by two friends, is another example of a company that achieved success with the assistance of Kickstarter campaigns. In 2014, David Jones and Michael Armani used crowdfunding to raise $3.4 million for their Micro 3D printer.
Amazon.com, Inc. (AMZN), Staples, Brookstone, and other retailers now carry the compact 3D printer and a selection of long-lasting 3D inks.
For its most recent animated special, “The Legend of Vox Machina,” Critical Role, a weekly tabletop roleplaying game with a group of prominent voice actors, raised $4.7 million in just 24 hours in April 2019.
This amount was raised by no other 2019 Kickstarter campaign during their 30- to 60-day fundraising period.
Investors looking to invest in real estate through crowdfunding can try real estate crowdfunding options.
11 Best UK Crowdfunding Platforms
1. Kickstarter
One of the biggest reward-based crowdfunding platforms in the UK and the rest of the globe, Kickstarter was established in 2009. The goal of Kickstarter is to support individuals in “bringing their creative projects to life.”
Backers of your Kickstarter campaign receive everything you produce as thanks for their support. Due to this, Kickstarter is a well-liked crowdfunding platform for budding eCommerce business owners and creatives.
Children’s books, Craighill, an album by the hip-hop duo De La Soul, and other unique ventures have all been made possible via Kickstarter.
The “all-or-nothing” approach of fundraising is used on Kickstarter. In other words, in order to get money, you must meet your financial target.
What if you don’t quite make it? Thereafter, utilizing Kickstarter was totally free. In the event that your project is successfully financed, Kickstarter will deduct 5% of the total amount raised. Moreover, there are 3–5% processing costs.
When you incorporate our all-in-one shipping platform into your campaign, Easyship, a Kickstarter partner, can help you save up to 89% on shipping costs.
2. Crowdcube
The first equity-based crowdfunding platform is called Crowdcube, one of the best UK crowdfunding platforms.
It enables companies in every stage of development to present their fundraising requests online to a large audience. Backers receive shares in the firm in exchange for their money.
Through Crowdcube, more than $1 billion has been invested. Although startups are encouraged to post on Crowdcube, the majority of listings are for well-established UK businesses looking for expansion capital to enter new markets.
Crowdcube welcomes backers of all stripes, from experienced investors to amateurs.
It costs nothing to list your company on Crowdcube. Just create a pitch video and present your argument. You pay a 7% charge on the money earned in addition to a $0.75–1.25% processing cost for payments.
3. Indiegogo
Almost 800,000 innovative and entrepreneurial projects have been funded on Indiegogo, a rewards-based crowdfunding platform, which boasts over 10 million monthly visitors.
You may organize campaigns or fundraisers for community and individual wellness on Indiegogo as well.
You have the choice between Flexible Funding and Fixed Funding on Indiegogo, one of the best UK crowdfunding platforms.
Even if the objective is not met, Flexible Funding allows you to keep every dollar you raise. Fixed funding implies that you must reach your campaign objective in order to keep the funds collected from backers.
With the exception of campaigns with a charitable focus, Indiegogo retains 5% of all cash earned. There is additionally a variable payment processing cost of 2.9 – 4.4% depending on your region.
Easyship, a partner of Indigogo, seamlessly interacts with your campaign so you can easily handle orders and shipping from a single dashboard.
Also, thanks to our pre-negotiated prices with all domestic and international couriers, including USPS, DHL, and many more, you’ll save money on every shipment.
4. Syndicate Room
An equity-based crowdfunding platform called Syndicate Room, one of the best UK crowdfunding platforms, assists entrepreneurs in obtaining finance from angel and venture capitalists.
Syndicate Room compiles a roster of qualified early-stage businesses, essentially serving as its own venture capitalist. Thereafter, Syndicate Room seeks to include other investors in the transaction.
Your project gets combined with other projects as part of a crowdfunding campaign. These diverse bundles are then purchased by investors who are hoping to become wealthy.
It can be a terrific method to secure capital rapidly since Syndicate Room provides some convincing figures regarding predicted returns, with goal returns of £3.50 for every £1 invested.
Your firm must be EIS qualified and UK-incorporated in order to be eligible for Syndicate Room.
Within 10 days after receiving your papers, Syndicate Room guarantees to review your company. A one-time cost of 2% of the entire investment, which can be between £400,000 and £5 million, is required.
5. Seedrs
One of the best UK crowdfunding platforms for investors called Seedrs links entrepreneurs with equity-based crowdsourcing sources such as angel investors, venture capitalists, and others for seed funding.
With only 1,318 sales, the website has already raised more than £1.1 billion. In terms of the amount of investments it has raised, this places Seedrs as the top-ranking crowdfunding platform.
In accordance with financing tiers, Seedrs platform costs are prorated. For the first £150,000 you raise, a transaction charge of 6% is due; for the following £300,000, a cost of 4%; and for any contributions beyond £500,000, a fee of 2%.
6. Crowdfunder
Using the rewards-based crowdfunding platform Crowdfunder, entrepreneurs may engage with investors about creative projects.
Crowdfunder, which was designed for all project kinds, enables both cause- and equity-based crowdfunding initiatives.
The Additional Funding function of Crowdfunder is its key benefit. Crowdfuncer links your campaign to companies that have cash available for certain causes and initiatives for qualified projects.
For instance, the insurance provider Aviva has promised to match any cash earned up to £50,000 towards community improvement in the UK.
In other words, Extra Money connects your cause with groups prepared to match donors’ contributions up to a particular limit.
For charitable contributions, charitable fundraising, personal cause projects, and COVID-19-related initiatives, Crowdfunder levies no platform fees.
Campaigns with rewards are subject to a 3% platform charge. Every campaign pays a transaction fee of £23 in addition to a 1.9% donation fee.
7. Fundable
One of the best UK crowdfunding platforms called Fundable assists new businesses in obtaining investment from the general population.
You have the option of running equity- or rewards-based crowdfunding projects. For startups, Fundable has so far raised more than $615 million.
For businesses that cater to consumers and have a financing target between $1,000 and $50,000, Fundable suggests adopting a rewards-based campaign.
For businesses selling goods, services, or B2B services with a financing target of more than $50,000, equity-based crowdfunding is advised.
Fundable bills a monthly fee of $179. Processing costs for each transaction are $0.30 + 3.5% of the pledge amount.
8. Crowd for Angels
One of the best UK crowdfunding platforms called The Crowd for Angels is situated in the UK and offers a variety of services to investors, company owners, and entrepreneurs.
The platform provides a range of investment options, including venture capital investments, equity crowdsourcing, and crowdfunding for loans.
The platform allows investors to finance venture capital firms, established enterprises, and startups.
Also, they have access to a variety of services, such as tax assistance, legal counsel, portfolio management, and due diligence.
9. Funding Circle
Small companies in the UK may obtain loans from a variety of sources at competitive rates with the aid of the debt-based crowdfunding platform Funding Circle.
Through Funding Circle, loans typically range from £60,000 to £120,000. Notwithstanding this, companies are still permitted to take out secured loans of up to $1 million and unsecured loans of up to £500,000.
Almost £6.2 billion has been funded for small businesses in the UK by 90,000 investors since Funding Circle’s founding in 2010. Fees for using Funding Circle will vary based on the type of loan and the loan conditions.
10. Zopa
Launched in 2005, Zopa was the first peer-to-peer (P2P) lender in the world and the largest P2P lender in the UK.
Due to the fact that their business strategy is founded on smart contracts, they connect lenders and borrowers online.
By eliminating banks from the equation, both parties profit: lenders obtain a greater rate of return that is higher than saving interest, while borrowers receive cheaper interest than they would have received from a bank.
The technology used by Zopa also eliminates early repayment costs. Remember that using these crowdfunding services won’t affect your credit score at all.
11. Funderbeam
One of the best UK crowdfunding platforms called Funderbeam allows users to invest in new businesses.
It makes it possible for investors to get access to venture capital, early-stage, and seed investments anywhere in the globe.
Investors may locate, research, and invest in companies with the use of the platform’s tools and services.
Moreover, it offers analytics, market information, and investment monitoring services to assist investors in managing their portfolios.
Also, they are providing their investors with special liquidity.
What Is The Difference Between Fundraising And Crowdfunding?
What precisely distinguishes these two sources of funding, and what about fundraising initiatives?
Campaigns for crowd fundraising almost usually involve a deadline by which the desired amount must be raised.
Fundraising efforts are an exception; although there may be objectives specifying the amount of money required, they are not legally enforceable. A set time limit is unquestionably more clear for supporters.
The all-or-nothing rule governs how crowdfunding operates; if the target fundraising amount is not attained, all donors will get a refund.
This is a benefit over fundraising since with this technique a “proof of concept,” or if the idea behind the crowdfunding project is a good one, is shown simultaneously. Moreover, it guarantees that the intended project can be carried out.
Depending on the form of crowdfunding, there may be an opportunity for a return.
This option undoubtedly gives supporters a reason to join the campaign while also forging a bond between the project’s creators and supporters.
What Are The Benefits Of Crowdfunding?
1. Crowdfunding Is An Effective Marketing Tool
Launching a successful crowdfunding campaign is a low-cost and time-efficient strategy for introducing a business and its goals to the market.
The best UK Crowdfunding platforms often include social media tools, making it simple to boost your website or social media following via shared content.
Several prospective investors and customers will find a startup via this method. These people are vital to viral marketing because they can spread the information to their friends and followers.
2. Crowdfunding Is Simpler To Use Than Conventional Apps
One of the most difficult procedures that any entrepreneur must go through, particularly at the beginning of the business, is applying for a loan or looking for other financial investments.
Luckily, compared to these conventional approaches, the crowdfunding platform procedure is a piece of cake.
An entrepreneur merely has to get in touch with the selected crowdfunding platform that most matches their campaign theme and purpose in order to begin the crowdfunding route to finance and visibility, share their venture’s compelling message, create a video, and set up some alluring incentives.
Planning the crowdfunding process can be difficult good thing there are crowdfunding platforms.
3. Crowdfunding Allows Getting Ideas From A Wider Audience
The ability to patch up any potential weaknesses in a startup is a major obstacle for small company owners and entrepreneurs.
Through a crowdfunding campaign, a business owner may interact with the public and gather suggestions, comments, and feedback.
This commentary is particularly helpful since it may shed light on some previously unconsidered facets of their company. It has the ability to spark new thoughts as well!
4. Crowdfunding Presents Potential Devoted Clients
An entrepreneur may exhibit their company and products via a crowdfunding campaign, as well as the message and the motivation behind them.
Individuals who watch the entrepreneur’s campaign and choose to donate are those who have faith in the long-term success of the business.
These folks are essentially early adopters. Every firm needs early adopters because they will help spread the word without expecting anything in return.
Such clients are likely to remain devoted patrons throughout the business’ whole existence since they care about its brand and message.
5. Crowdfunding Allows Hedging Of Risk
A business’s inception is an extremely difficult and hazardous process.
There are always expenditures that are hard to predict, difficulties with market validation, and other individuals who want a piece of your enterprise in order to help it take off, in addition to the usual hurdles of securing enough money.
Starting a crowdfunding campaign mitigates these risks and provides a worthwhile educational opportunity.
The current state of crowdfunding enables an entrepreneur to test the market without releasing equity before investing everything into bringing a new proposal to market.
6. Crowdfunding Offers The Chance For Pre-selling
An entrepreneur may pre-sell a product or idea that they haven’t yet brought to market by starting a crowdfunding campaign.
This is an effective technique to assess consumer response and examine the market before deciding whether to pursue or abandon a certain proposal.
7. Crowdfunding Provides Proof Of Concept
It’s challenging to demonstrate to investors and convince oneself that early-stage market validation has been achieved for a business idea.
Crowdfunding, however, facilitates such actions.
An effective crowdfunding campaign may demonstrate your venture’s viability to potential angel and institutional investors, who will likely ask about proof of concept as their first query.
This demonstrates honesty and trust at the outset of a business and makes it possible to check along the way if one is on the correct path.
8. Crowdfunding Gives Access To Funds As Capital
Early on, an entrepreneur could believe that the only sources of funding available to them outside of their personal network are banks, venture capitalists, and authorised investors. It is untrue.
A excellent option to taking on debt or giving up stock to support a project is via crowdfunding.
Platforms for rewards-based crowdfunding let business owners generate money from the public by simply offering their physical goods or other presents to loved ones.
9. Crowdfunding Offers Free Publicity For Projects
Successful crowdfunding projects generate momentum that draws media coverage and prospective investment from conventional sources.
Positive stories make for engaging reading, and journalists are always on the lookout for them.
These days, crowdfunding is a distinctive and popular sector, and several business owners who have found success with it have benefited from more success and visibility.
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