Whether your business is refused a bank loan or you want to try an alternative method of fund raising, crowdfunding is picking up the pace and becoming a viable funding option for many businesses.
Artisan food and drink retailer, Sourced Market has recently secured over two thirds of its investment target in order to expand and enter the next phase of its growth plan.
All this has happened through crowdfunding.
In three weeks, Sourced Market raised £636,500 through a crowdfunding website called Crowdcube and has until December 19 to source the remainder of its money.
But what is crowd funding and is it something farmers could use?
Crowdfunding offers small businesses the opportunity to apply directly to investors in order to build up enough funding for their chosen project. This means bypassing banks who may turn down a funding application for a whole host of reasons.
It also means anyone can invest into a new business or expansion, whether they want to give £5, or £50,000. However, some crowdfunding exercises, such as Source Market, require a minimum investment; in this case it is £500.
Crowdfunding validates your idea as it gives you the confidence to know people believe in your project and are willing to invest their money to help you succeed.
There are three different forms of crowdfunding which alter the investor’s position within the business equation.
As the name suggestions – investment is taken as a donation with no expectation of reward.
Investors receive their money back with interest, similar to how a bank would lend money.
People invest their money in exchange for equity, most commonly a share in the business or project.
Ben O’Brien, founder of Sourced Market, said: "The support that has come in from our existing networking and new investors has blown us away and we now feel confident of meeting our target.
He said a key factor to understand in crowd funding is to ’understand things may not always go to plan, but it is important to remember that any hurdles you manage to overcome will leave you better prepared for future challenges’.