Our guide to Crowd Funding – how to fund your ‘ethical’ business

Crowd Funding has become a simple way of generating  money for various activities, including businesses. This method allows lots of people to donate a smaller sum of money to an organization of their choosing, as opposed to one or two individuals investing a large amount. Recently a businesswoman set up a crowd funding page for a Cat Café and has raised over £17, 000! you can view this here.

The question is, how can crowd funding work for your social enterprise? To answer this, we’ll turn to a popular website, justgiving.com. This website allows people to make donations to a sponsored charity event, such as a marathon. The person doing the activity produces a page to inspire people to give; donors can send whatever money they wish, and the whole transaction takes place relatively hassle free.

With a social mission at the heart of your enterprise, crowd funding has the vantage point of being able to inspire in the same manner as a charitable activity. If you can appeal to those who either share your mission or would even benefit from it, you’re in with a chance of success. It also is a great time saver, as you essentially create one pitch and allow the public to decide whether it is a viable and useful idea or not. There are however a few things you should be aware of when looking for your crowd funding platform:

  • Some investments aren’t obligation free – whilst there are a number of platforms where you can receive funding with no commitment, some of them take a commission on your funding. On a similar note, some crowd funding sites come with the obligation of returning some of your revenue or equity to the people who invest in.
  • If you want to incentivise funding by offering a product to your investors, DO YOUR MATHS. If your product costs £2 but you only receive multiple £1 donations, you could be in for trouble.
  • Some platforms work on an all-or-nothing basis – if you don’t hit your goal you don’t get your money. This is pretty easy to navigate. Some platforms leave it up to you to return the money if you don’t hit your goal. This is far less easy to navigate.

The sentiment here is, as always, do your research. When it comes to other people’s money, it’s always best practice to read the fine-print and protect yourself from any crowd-sourced calamities.

On that note, here are a few websites where you can begin reaching out to the public for investment:

http://www.indiegogo.com

http://www.fundable.com

http://www.fundageek.com/

http://www.funding4learning.com/

Josh Lee
Employer and Events Administrator
QM Careers Centre

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