Got a great business idea but not enough cash to kick it off? Maybe you can entice the general public to stump up the cash...
We’re not talking about duping unaware investors or pestering public servants, just putting your idea out there to see if there are enough supportive souls to get it off the ground.
It’s called crowd funding and it’s rapidly revolutionising the way start ups finance their next steps.
A range of businesses have been set up to facilitate pitching platforms where individuals say what they plan to do, how much they need to do it, and what they can provide in return.
The most common offers by entrepreneurs involve small gifts or acknowledgements. Maybe a new barber shop will provide free haircuts to investors, and artist a print or a restaurant a burger named after its biggest donor.
Alternatively, some businesses offer equity in the company, but this is by no means expected of crown funding recipients, and remains in the majority.
And before you doubt the ability of these platforms to secure capital for your idea, check out these numbers.
Industry experts are predicting $US6 billion worth of global and successful crowd funding projects will get off the ground this year alone.
The biggest crowd funding site is American outfit Kickstarter, which had over $300 million pledged in 2012 and over 18,000 projects successfully funded.
But that’s not to say the avenue is at all limited for Australian setups, with locally based Pozible in particular opening up funding opportunities closer to home. Last year Pozible saw over 1,900 projects launched and $5.8 million pledged across 89 countries, with a very healthy 49% success rate.
And every industry is getting in on the act with music, interestingly, getting the most ventures off the ground in 2012. The Kickstarter platform itself saw 5,067 music projects successfully funded.
At home, Aussie rockers Eskimo Joe recently launched a campaign to fund their new album after ditching their record label, and with just under a month still on the clock have already exceeded their target of $40,000.
This follows Canadian rock band The Tea Party’s successful campaign last year where they received over three times their goal, allowing them to record and release their “Live In Australia” album worldwide.
And these well known bands raising such big amounts demonstrate that it’s an outlet for established businesses and the wider community groups, as well as new ventures.
As you might now appreciate, crowd funding has quickly established itself as a pillar of the start up scene and wider business finance market. So if you’ve got an entrepreneurial itch but not the capital to scratch it, be sure to check it out.Come and tell us about your experience.