Get Funded

Seed crowdfunding outperforms government’s Start Up Loans scheme in 2016

Hunter Ruthven | 18 January 2017 | 7 years ago

Seed crowdfunding on Kickstarter
Platforms such as Kickstarter have helped British businesses access growth capital
New statistics have shown that seed crowdfunding provided 40 per cent more funding to UK businesses in 2016 than the flagship Start Up Loans initiative.

Research from The Crowd Data Center, derived from 500, 000 crowdfunded deals, revealed that there were 68 fully-funded crowdfunding projects each day during 2016 with the average amount raised around 25, 000.

“We have defined ‘seed-crowdfunding? as the use of rewards-based platforms to fund the creation of new businesses, products and services, said Barry James, CEO of The Crowd Data Center. Until now, rewards crowdfunding, as it’s often known, has been mostly associated with charitable and community funding.

The sectors around the world with most funded campaigns included film (3, 169), music (3, 114), design (2, 504), publishing (2, 124) and gaming (2, 110). The figures, which Business Advice was given exclusive early access to, showed the US is leading the way with 15, 515 funded projects.

However, it is the performance when benchmarked against the government’s Start Up Loans scheme that shows the reach of seed-level crowdfunding. Set up in September 2012, the Start Up Loans scheme operates as an independently-managed and government-backed programme supposed by the British Business Bank (BBB).

“Now we have the full 2016 data this makes possible a direct comparison with Start Up Loans, revealing that businesses are being better funded, and at a lower risk to all involved, James added.

what’s more, seed crowdfunding is ready to move out of the early adopter stage so, with the right support, could treble in size and impact over the next two or three years.

Comparing figures published December 2016 by the Start Up Loans Company revealed that, on average, UK businesses received 40 per cent more funding (£8, 729.20) from a seed crowdfund than from a Start Up Loan (£6, 246.28). Volumes are comparable, with crowdfunding supporting 66 per cent (5, 992) as many venture as Start Up Loans (9, 125) in the last year.

The figures attracted attention from MP Barry Sheerman, who chairs the all-parliamentary group supporting the development of crowdfunding through its early stages. I can tell you that the 2016 data and this finding provide a very significant milestone with profound implications for UK businesses, entrepreneurs and government, the politician commented.

not least because while a huge investment has been made in Start Up Loans, seed crowdfunding has been entirely self funding and has huge scope for growth across the UK, without burdening taxpayers.

In September, Business Advice spoke to Tom Putnam, co-founder of cycling navigation device BeeLine. The young business owner decided to use rewards-based seed crowdfunding platform Kickstarter as a way of first funding his enterprise, before then turning to the equity-based offering when more capital was needed.

we didnt ever consider not doing reward crowdfunding, as that kind of funding has enabled companies like us to start with nothing, Putnam added.

there’s no way we would have got investors to the level we needed, spending that amount of money on something you didnt even know if the market existed for.

Have a look at the infographic below for all the headline seed crowdfunding data from 2016
2016_TheCrowdfundingCenter_-_RewardsCrowdfundingInfographic

Topic

Get Funded

Related Topics

A Guide to Government Grants for Small Businesses
2 June 2023

A Guide to Government Grants for Small Businesses

Read More →
What is Structured Finance?
4 April 2023

What is Structured Finance?

Read More →
How to Get a Business Loan
22 November 2022

How to Get a Business Loan

Read More →
What Are Bridging Loans?
16 November 2022

What Are Bridging Loans?

Read More →
How to Finance a Property Development
7 November 2022

How to Finance a Property Development

Read More →
Everything you need to know about bridging loans for business owners
29 August 2019

Everything you need to know about bridging loans for business owners

Read More →

If you enjoy reading our articles,
why not sign up for our newsletter?

We commit to just delivering high-quality material that is specially crafted for our audience.

Join Our Newsletter