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Scotland Racing Ahead in Crowdfunding

Scotland Racing Ahead in Crowdfunding

The Scottish Crowdfunding Report 2016 was published this month and provides a fascinating update on the benchmarks established in the 2013 report and demonstrates Scotland’s rapid advance in UK crowdfunding.

Scottish Crowdfunding Reporttwintangibles was pleased to be commissioned to research and write both of these important reports on the specific and distinctive characteristics of crowdfunding in Scotland.

Significant progress has been made in the past three years from a position where we suggested that the low adoption rates of crowdfunding in Scotland  were perhaps a missed opportunity to a position where Scotland is outstripping the rest of the UK in its growth rates.

The report is focused on the use and impact of crowdfunding on business and has used a consistent approach across the two reports to ensure comparability. Drawing on crowdfunding activity data analysis, survey material and expensive interviews and focus groups the report highlights a number of key feature. Notably it demonstrates a significant the increase in the Scottish share of the value created from crowdfunding in the UK.  Scotland has jumped from a position of less than 1% of the UK total to 4% and this at a time when the UK crowdfunding sector has been growing at a remarkable rate. In the period the data was gathered Scotland raised some £27 million pounds through crowdfunding. The bulk of that, some £20 million, was raised through the Lending model. The dominance of the lending model is not a surprise and is in common with the rest of the UK but it is worth noting that in the Reward space Scotland commands around 7% of the UK totals raised.

Scottish Crowdfunding Report

Through the course of the three years the sector has matured significantly with both the size and nature of campaigns growing along with the range of sectors accessing these funds and the stage in a business life cycle where the funding is being sourced. For example we can see evidence of more mature businesses accessing crowdfunding, no longer is it considered simply for start-ups. A particularly interesting case included in the report highlights an investor exit using a crowd loan to finance the deal.

We suggested back in 2013 that it was not unreasonable to see Scotland’s share of the UK crowdfunding totals to reach around 8%. Some disagreed with this but the evidence seems to suggest that Scotland is getting there and we still stand by that aspiration.

The report was once again supported by the Glasgow Chamber of Commerce along with three new partners for this edition, those being Harper Macleod the law firm that has done so much to champion equity crowdfunding north of the border, LendingCrowd the Edinburgh based innovative crowdlending platform and Santander which as  one of teh major high street banks is demonstrating considerable engagement and openness to the crowdfunding sector, not least through their support of the report.

The full report is available for download free of charge in soft copy for the Glasgow Chamber of Commerce website.

Alternative Finance Is Coming of Age

Alternative Finance is coming of age and becoming mainstream in the UK as Governments begin to actively embrace and legislate for its effective use.

Earlier this month we had the privilege of organising a Parliamentary Reception at Holyrood entitled “Crowdfunding in Scotland – The Way Forward”

Hosted and initiated by Chic Brodie MSP the event brought together a wide range of interested and engaged parties alongside Parliamentarians exploring the opportunity presented by crowdfunding. It was great to see real interest and leadership at a Governmental level exploring and recognising that crowdfunding represents a real change in the way businesses and organisations across all sectors can find novel approaches to funding, and recognising this is more than a passing fad. The assembled participants heard stories of active and successful use of crowdfunding from a number of perspectives. This included Stuart Patrick CEO of the Glasgow Chamber of Commerce and their engagement with Funding Circle to help Glasgow business. Kevin Miller of RunRev who have recently closed a second crowdfunding round this time a DIY campaign for £250,000, explained why crowdfunding works for them. Warren Bader of Plan Bee who have successfully run a an overfunded round on Crowdcube set out the importance of this type of funding for such an innovative startup, and Neil Simpson if Brewdog revisiting their extraordinary successful fourth equity raise.

On the same day the Chancellor, George Osborne made further announcements that underpins the UK Government’s support for FinTech and alternative finance in particular. One of the key points was the promise to introduce legislation that mandates that Banks who turn down a business loan application will become obliged to offer to pass their details onto alternative finance providers. This builds upon the existing Alternative Business Funding website that provides a simple traffic light approach to assess the high level suitability of an firm to alternative finance.

All this is demonstrating a growing maturity in the alternative finance sector and how it is increasingly important for businesses, and all the groups and services that deal with them, to understand what is on offer. Our expertise in crowdfunding has already proven invaluable to many organisations wanting to understand, use, engage and succeed with crowdfunding.

We will continue to offer the sort of unbiased and balanced advice to clients from all areas as the sector progressively innovates and develops.
So, alternative finance is rapidly becoming part of the mainstream and part of your finance mix, do you know enough to maximise this opportunity? If not then be sure to contact us.

Scottish Crowdfunding Ending 2013 on a Positive Note

The closing months of 2013 seemed to demonstrate something of an up tick in the levels of interest in crowdfunding in Scotland.

East Fife football club launched a campaign for £100,000 to develop a new stand and other facilities at the club.

A second equity platform, ShareIn, launched in Scotland. Brewdog have pursued a further funding round in their own inimitable style closing in on a £4.25 million investment through their Equity for Punks scheme.

The  MacAulay & Co show show on BBC Radio Scotland  invited me on to speak about the phenomenon of crowdfunding – and you can hear that here if you missed it.

The first successful Scottish equity crowdfunding round on Crowdcube  completed as NewGalexy hit and exceeded their target – having sought some £100,000 for 10% of equity and reaching £200,000 for 20%

The Scottish Parliament took a real interest in crowdfunding as part of an investigation by the Economy, Tourism and Energy Committee began and investigation of the alternative funding sector. We were privileged to be asked to give evidence to the committee and if you missed that session you can see it here.

It is particularly pleasing to see the political classes recognising the potential of the democratising of capital to bring about positive change, entrepreneurial dynamism, and direct engagement of the people with shaping their financial future

And all that is a year when the first Scottish hybrid equity platform Squareknot launched and we released the ground breaking Crowdfunding the Scottish Perspective report – commissioned by the Glasgow Chamber of Commerce. Whilst the report demonstrated that Scotland was under using the resource and opportunity of crowdfunding perhaps this flurry of events late in the year might indicate some positive developments to address that.
What does it promise for 2014? Well we hope only good things. But one thing for certain is that whatever does happen you will find the best commentary, coverage and insight on crowdfunding and the crowd empowered economy and society here at twintangibles.

Crowdfunding – The Scottish Perspective

This morning a report, commissioned by the Glasgow Chamber of Commerce, was released at a breakfast event in Society M in Glasgow. Called “Crowdfunding – The Scottish Perspective” the report was produced by twintangibles and sets out the findings of a comprehensive review of the Scottish business communities awareness of, and attitude to, crowdfunding and how well it might fit the finance shortfall that persists post the financial and economic crisis of 2008

Amongst its key findings is that there is an ongoing need for finance particularly in the SME sector. This will come a no surprise to even a casual observer of the UK wide business environment. But what is much more interesting is that the size of funding typically sought, and the purpose to which it will be put, both fit well with crowdfunding.

Firms in the survey sought a range of sums which averaged at c.£50,000 and in many cases the funds were sought for innovation and new product or service development. Crowdfunding in its many forms is well able to provide this  sort of sum for a well managed project, and the crowdvalidation element of a crowdfunding project can bring considerable benefit to those developing innovative and new products or service.

However, it is also apparent that Scotland is significantly under utilising the opportunity presented by crowdfunding, and there is no simple answer as to why this is.

It does seem that the awareness and deeper understanding of the potential for crowdfunding needs to be more widely embedded in the business community to build the confidence to turn an interest in crowdfunding into active engagement.

We believe the commissioning of the report and its release today was a far sighted act by the Glasgow Chamber of Commerce and we hope that it marks the beginning of a process that we hope will lead to Scotland taking up a greater share of the crowdfunding opportunity available.

You can find much more detail and food for thought in the complete survey and, best of all, its free!

You can download and read the report here

You can hear what Tim had to say about the report on BBC Good Morning Scotland


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