Crowdfunding to help finance businesses has been a real growth area in the UK economy for the last 10 years.

“Fintech” companies, as they are called, now provide many different forms of lending to both businesses and consumers. Their background makes the way they assess applications and provide financial support very different to traditional banks and building societies.

In this article, Burton Beavan looks at six of the most popular UK-based B2B crowdfunding sites.

Funding Circle

Funding Circle is, by far and away, the largest B2B crowdfunding site in the UK. They only offer business loans to companies which have at least 2 years’ accounts filed. They do not offer any form of equity funding and they do not work with start-ups.

Burton Beavan terminology – “equity funding” is a form of investment where you pay money into a business to help it start and/or grow in return for a small shareholding.

Funding Circle is a risk-adverse lender mainly focused on providing stable returns for its investors. Their typical client turns over £420,000, has 5-10 members of staff, and has been established for 8 years.

You can apply for a loan directly or through a broker.

You’ll need to provide your last annual accounts (that’s the full accounts we give you and not the shortened one that we file at Companies House) and your latest set of management accounts (we can do those via Xero for you). You may be asked for other documents (VAT, bank statements, etc) and explanations on unusual movements of money within your business (an asset disposal, asset purchase, atypical rise or fall in turnover, and so on).

If your loan is approved by the underwriting team at that point, it will go onto the Funding Circle platform where investors can subscribe to your campaign. Investors are not just individuals – the government-owned British Business Bank, local authorities, and institutional investors also use Funding Circle.

In order for you to get your loan, investors must be prepared to put in the exact amount you’re asking for. If you’re a penny short, you won’t receive the money.

To find out more, please click here.

Seedrs

Unlike loan-based Funding Circle, Seedrs is an equity funding platform for investors and businesses. Like Funding Circle, this is “all or nothing” – you must be pledged the amount you want to receive. One difference on this site though is that over-funding is allowed – you can accept more than you originally sought.

Seedrs provides opportunities for start-ups and early-stage businesses to raise capital. The type of investments on Seedrs can be eligible for SEIS investment – more on that in a later Burton Beavan article.

Click here to see the types of companies currently raising cash on Seedrs, the amount they’re asking for, and the level of equity they’re prepared to sacrifice.

Crowdcube

Advertising themselves as the “leading crowdfunder for investment following a record-breaking start to 2017”, Crowdcube offers a very similar model to Seedrs. At time of writing, they had successfully funded 566 companies to the tune of £335m over their 5 years.

You can see a list of the current businesses advertising for support by clicking here.

Syndicate Room

Syndicate Room offer more of a “Dragons’ Den” spin on crowdfunding.

It allows amateur and private investors to provide financial backing to the companies that angel investors are already excited about and have put money in. Angel investors, as well as cash, bring skills, knowledge, experience, and connections to the companies they invest in.

Amateur investors, the company says, can therefore be more confident about the chances of success and financial return from the firms on the platform because they have access to the angel or angels in growing and scaling their businesses.

It’s currently not possible to see all the investment opportunities on the platform as the site requires you to register. A selection of opportunities which have been fully funded are available to view on their home page.

ShadowFoundr

ShadowFoundr only allows companies onto its platform when it has achieved a minimum of 30% funding from its private investor network. Like Syndicate Room, it offers private investors the chance to back the same companies as the investing professionals.

Around 20 opportunities are brought to the platform every year so, in numbers alone, it is the most selective of sites and the most difficult for entrepreneurs to find their business listed on.

Here is an example of a business they’re backing. As you can see, it’s already attracting £20,000 a month in sales and lists Amazon, Nike, Disney, Virgin, Unilever, Samsung, and Nintendo among its customers.

To see more of their investments, click here.

LEOcrowd

LEOcrowd takes a completely different approach (it’s a bit like KickStarter in the USA).

This does not offer investment opportunities or equity to investors. It offers rewards instead. The types of investments offered on the platform aren’t always businesses. At the time of writing, one of the projects listed is an art exhibition, one is for voluntary teaching fellowships in Uganda, and there’s also one for a natural herb dental powder.

Here’s one investment opportunity for a company called Courier Bid. The promoter describes the service as a “revolutionary solution for the delivery market, making courier services more efficient, effective, and eco-friendly.”

A £10 pledge gets a thank you and a £250 pledge gets one year’s membership to the service plus a free entry into a prize draw to win an iPad and an iPhone.

The site is very popular and easy to use. The amounts being asked for are significantly lower than other sites in this article though so if you’re looking for a large investment, this may not be the platform for you.

Work with Burton Beavan on fund raising for your business

We have a dedicated tech- and fast-growth-business team here so please get in touch with us if you’d like to talk about taking your business to the next stage using crowdfunding. Our MD, Gareth, is a veteran of Silicon Valley and has seen many a company-changing deal done with both angels and VC funds.

Call us on 01606 333 900 or email hello@burtonbeavan.co.uk.