Economic growth

Kickstarting the UK crowd

Liam Collins and Peter Baeck - 02.11.2012

Last week saw the arrival of Kickstarter, the US crowdfunding behemoth to the UK.

The platform which has thus far raised $344 million for a variety of creative projects will serve as a much-needed source of capital for artists and entrepreneurs struggling to source capital in austerity Britain. Its arrival also has the potential to act as a catalyst for the growth of crowdfunding in the UK and bring this exciting model of financing into the mainstream.

Crowdfunding, the approach of sourcing relatively small amounts of capital from large numbers of funders is one with a long history but technology and the explosion of social media has let to enormous growth in the market over the past few years with an estimated $1.5 billion raised through online crowdfunding platforms in 2011. Kickstarter operate the 'donation-reward' or 'pre-purchase' model of crowdfunding which has become the most prevalent during the recent boom in the market where individuals can pledge money now for a reward at a later date. While Kickstarter's arrival here will bring the massive benefit of giving UK artists and entrepreneurs easier access the platform's enormous user-base it is important to recognise that there is lots more also happening in the crowdfunding space.

Also in the creative space platforms like WeFund and Pleasefund.us have already been bringing the model to UK artists. Peoplefund.it and Buzzbnk have more of a focus on projects with a social objective and are proving innovative models of encouraging more giving in society. Successful projects like the Bicycle Academy and the New Leaf Co-op have demonstrated how the power of a crowd with a shared vision can fund exciting new things.

Civic crowdfunding is another exciting application that has the potential to disrupt how public services and spaces are used and paid for. Spacehive has been pioneering co-investment models between the crowd, private and public investors in the UK with early successes like the Glyncoch Community Centre in South Wales and exciting live campaigns like Cody Dock in East London.



Equity crowdfunding is an area where the UK has been a global leader. Platforms like Crowdcube and Seedrs are offering individuals the opportunity to get an equity stake in innovative UK businesses like Escape the City and DigitalSpin. For older and less risky ventures FundingCircle offer the opportunity to access crowdfunded loans. The world leader has thus far facilitated over £56m in lending to more than 1000 UK businesses offering interest rates over 9% to lenders.

To help those interested in getting involved in either raising or contributing money through crowdfunding Nesta is in the process of producing a thorough landscape report. This will illustrate to prospective participants the distinctions between the different crowdfunding models in operation, what types of sectors they are operating in and what is involved with raising or contributing capital through these models. We also look at the underlying principles behind crowdfunding and whether this is a short-term fad or a valuable source of capital for the future. To see the first output from the research, read our 10½ tips for raising funds from the crowd.