The Venture Crowd: CROWD FUNDING EQUITY INVESTMENT INTO BUSINESS
By Liam Collins and Yannis Pierrakis (July 2012)
Crowdfunding is big business. The idea of financing projects or businesses with small contributions from large numbers of people is catching on in a big way and now accounts for significant amounts of money. In 2011 alone, $1.5 billion was raised through crowdfunding for projects and businesses in need of funds. Not only does the model provide finance but also access to a large number of people who can test and market an idea. Crowdfunding takes a number of different forms, the most successful of which has been the reward–based model where participants receive non–financial rewards in exchange for donating to a project. The model effectively harnesses not only the contributors’ desire for the reward but also the intrinsic or social motivations to back a project. Other forms of the model are, however, also growing rapidly. The most recent of these is equity crowdfunding, where individuals receive small stakes in a privately owned young business in return for investment.
Nesta is the UK’s innovation foundation. We help people and organisations bring great ideas to life. We do this by providing investments and grants and mobilising research, networks and skills.
We are an independent charity and our work is enabled by an endowment from the National Lottery.
Nesta Operating Company is a registered charity in England and Wales with a company number 7706036 and charity number 1144091. Registered as a charity in Scotland number SC042833.
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