With interest rates at an all time low, shares plummeting daily and bonds yielding all time lows are there any other ways you can invest your money that may achieve some returns.
So what are the options? Crowd Funding is a new concept that has arrived this year to the UK. The way it works is rather than one large investor investing in the small business, larger numbers of smaller investors invest small amounts to raise the required capital.
Although risky, the fact that you can invest small amounts for potentially high growth means the risk reward ratio is high. Step forward Crowd Cube, the first UK based business crowd funding website.
From an investor stand point Crowd Cube investor members can invest as little as £10 to thousands, so you do not need to be a high net worth individual to invest in any companies you like. The benefits of course are shares in an early stage company so if the company meets its targets and is sold or floated you could realise some profit and of course purely altruistic, just helping small businesses you believe in.
Graham Jules Director of Real World Gallery is one business owner who is trying this alternative to funding for his business via crowd funding website Crowd Cube. Jules says:
‘ I believe crowd funding is the future of funding for small businesses, We provide pop up space and workspace for creative people, we have already trialled our concept in two locations in London and are looking to expand the concept throughout the UK but have found it difficult to raise finance through traditional means. This is an exciting opportunity to raise money to expand the business. The way it works is you give away a percentage of your company in return for the finance much in the same way as BBC series Dragons Den. Rather than pitching to your investors live you post your pitches online.’
It appears the Crowd Cube website has already had some success and has already financed one company to the sum of £75,000 and other company funding targets are imminent.
In the US the crowd funding phenomenon has really taken off, the most famous of which is Kick Starter who funded a project to the tune of $200,000 !
All in all it appears crowd funding may be an alternative way to invest in UK small businesses at levels anyone can afford.
