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Crowdfunding: a new way to raise finance

Crowdfunding: a new way to raise finance

Crowdfunding is one of the many ways that the internet has revolutionised the way we do business in the 21st century.

When small businesses sought finance in the pre-internet age, the chances were they’d have to go through a bank or seek finance from venture capitalists.

However, thanks to the boom in crowdfunding platforms over the last 5 years, business owners have other options when it comes to raising finance and anybody can become an investor.

Equity vs debt crowdfunding

Equity crowdfunding

Equity crowdfunding enables you to attract finance from a large number of people.

Using your choice of online platform, you create a page that will act as your pitch to investors.

It should contain your business plan and financial forecasts to persuade site visitors to invest money in your business.

Those who decide to invest receive shares in your business, meaning that you sacrifice an amount of ownership in your company.

 

Debt crowdfunding

Businesses can use debt crowdfunding (also known as peer-to-peer lending) to lend money from thousands of different investors.

It works in the same way as equity crowdfunding, but instead of selling a stake in your business, you borrow money from people who see your business as a good investment. 

The individual investor will decide on the amount of money they want to put into your business and the interest rate they would like to receive on their investment.

After your target amount has been met, the final interest rate will be calculated based on the average rate asked for by your investors.

Contact us

Knowing how to attract investment can be the difference between success and failure. Poor planning and weak pitches will struggle to give potential investors the confidence they need to buy into your business. Our team can help you hone your pitch and develop a watertight business plan to ensure that you

Fill out our contact form, email tracya@knightandcompany.co.uk or call 01628 631 056 for assistance with raising business finance.