20x As Many Entrepreneurs Funded and “Doing It For Themselves”
A Golden Opportunity, meanwhile Government “Needs New Thinking” says MP
Below local and national government’s RADAR thousands of local entrepreneurs, including hundreds locally, are getting the leg up, and finance, they need to get started and to grow according to new data just released for UK Crowdfunding Week. Around twenty times as many as current official government estimates.
The CrowdDataCenter.com who have collected data on more than a quarter of a million crowdfunds from across the globe in 216 countries over the last two years just released the latest update on global and UK data for 2015, to October – plus this infographic.
The latest government figures, quoted in the House of Commons this week, could hardly have been much further from the mark, missing more than 95% of those funded.
The contribution from [equity] crowdfunding has grown strongly since 2012. By the third quarter of 2014, deal numbers exceeded those of private equity, accounting for almost one-third of seed funding deals in the first half of 2014.”
Small Business Minister Anna Soubry, 9th November 2015
Demonstrating that government, because they’re using outdated measures, have missed the fact that crowdfunding has overtaken all other forms of seed-funding, and missed the vast majority of what is happening in what it accepts is a crucial area. Missing most of a phenomenon enabling thousands of people to get businesses started or new products and services launched, creating real jobs.
Crowdfunding is many times better at seed-funding
There’s an overlap with Angel and VC funding but Crowdfunding is much better at seed-funding and innovation than anything that’s gone before. It has overtaken them many times over yet is remains off the RADAR! Despite the fact that it also supports budding businesses from an earlier stage than has ever before possible – helping compensate for the retreat of the banks ” commented Barry James Founder & CEO of TheCrowdfundingCentre.com
The most recent British Business Bank report on UK Crowdfunding, by equity analysts Beauhurst for the Department of Business Innovation and Skills, looked only at equity Crowdfunding comparing it with lending and Private Equity.
“Equity crowdfunded deal numbers and investment totals have been steadily rising since 2011, when only £1.6m was recorded as being invested across 7 deals. In the first half of 2014, £24m was raised across 101 crowdfunded equity investments, according to Beauhurst data. This is equivalent to 18% of total visible deals and 2% of total visible investment.” Hansard 9th Nov.
In the same period Beauhurst reported 101 deals, around 2,000 UK ventures were funded by Kickstarter-style crowdfunding (often called ‘Rewards’ crowdfunding and sometimes confused with donations Crowdfunding). Around twenty times as many..
This year so far we have seen more than 3,550 ventures funding in categories ranging from Technology (235 projects averaging £36,700 each) to Film (1,053 averaging almost £4,000 each). Around three times as many get great feedback from their potential market – enabling them to ‘fail fast’ or change tack, as so many of the most successful Crowdfunds have done in the past.
Crowdfunding is now rivalling the government’s flagship schemes
The figures available suggest crowdfunding is now rivalling the government’s flagship ‘Startup Loans’ scheme in it’s impact. “If this were a public funded government initiative we’d all have heard about it” commented James “as it is it’s seed funding so many more entrepreneurs than either the private sector or any government backed mechanisms. It’s FinTech (Financial Technology) for entrepreneurs. It’s time for government to look at modernising the way they understand and measure these things, and so support entrepreneurs and business creation”.
Barry Sheerman MP who chairs the All Party Parliamentary Group on Crowdfunding and non-bank Finance said “Crowdfunding is creating new opportunities, supporting grass-roots entrepreneurs across the country by providing seed funding and direct access to local and global markets. We need new thinking in this area, new ways to understand and measure what is as major a disruption to the entrepreneurial economy as iTunes was in music and Amazon in retail. Most of all we need to grasp this golden opportunity to support entrepreneurs everywhere and work with them to create jobs where they’re most needed.
I will be writing to Business Secretary Sajid Javid to invite him to fully engage with our All Party Group and make good use of all the data we now have at our disposal.”
Barry James, who is also a co-founder of UK Crowdfunding Week concluded “We will also be sending our report to the British Business Bank and making all the relevant data available so that hopefully by the next Crowdfunding Week we can work with them as well as the Department for Business Innovation and Skills to fully research this important and permanent change to the UK’s entrepreneurial economy and how it can be properly reported and supported” .
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