In Huddersfield a woman is looking for £3,000 to buy 150 hens and expand her free range egg business. Over in Hebden Bridge a choreographer is hoping to raise £1,000 for an interactive performance inspired the Norse myths. A few months ago, a North Yorkshire a filmmaker appealed for £8,000 to fund what he described as a claustrophobic thriller he was calling The Lambing Season. In just 28 days, 170 supporters had stumped up more than £9,000. They are not the only ones. While a few years ago crowdfunding websites like Kickstarter used to be the preserve of a distinct breed of techy entrepreneurs, where they led others have followed.
According to latest figures, in the last 12 months the number of cancer patients raising money to pay for treatment not available on the NHS has risen seven fold and a quick trawl through Crowdfunder.co.uk reveals a website populated by would be authors, musicians and foodies, all wanting a little leg up to help turn their latest dream into a reality.
Earlier this month the team behind Norse in Harrogate launched a Kickstarter campaign to raise £20,000 to help fund a move into new premises near to the town’s Valley Gardens. Paul Rawlinson, owner and founder of both Baltzersen’s and Norse, says he had already secured a chunk of private investment to take his business to the next level, but crowdfunding provided a convenient way to top up the funds.
“For almost three years, Norse has been an after-hours pop-up in Baltzersen’s, but now feels like the right time to give it a permanent venue of its own,” says Paul. “A lot of Kickstarter projects are about developing a commodity which in theory has a worldwide audience, but ours was always going to be more geographically sensitive and as well as allowing us access to a different funding stream it also allowed us to reconnect with people who have already been our customers.”
The food critic Jay Rayner, who had previously written a favourable review of Norse, helpfully tweeted out news of the campaign which had various reward packages, including a season ticket covering four meals for two in return for an investment of £360 or more.
“The worst thing you can imagine is that you go live and there is nothing but silence,” says Paul. “Fortunately that didn’t happen, although we had put a lot of hard work in prior to pushing the button to make people aware of what we were doing. By the end of the first day we had raised £5,000 and by the end of the second we had pledges totalling £10,000. On the third evening I went to bed quite early and woke up to find we had already made our target.”
Paul hopes the new Norse restaurant will be open in six weeks and buoyed by the success they had on Kickstarter he is now extending the campaign with a new target of £30,000. “The idea of crowdfunding can be traced back to the band Marillion,” says Guy Shone, chief executive of the finance website ExplaintheMarket.com. “In the late 1990s, when the internet was still in its infancy, they raised $60,000 from fans to fund a tour of North America.
“However, there has definitely been a surge in crowdfunding enterprises in the last couple of years. It’s estimated that there are now up to 400 new projects being launched each day and it’s easy to see the appeal. “Traditionally, if you wanted money to start a business you had to present a 20 page business plan to a bank manager. Websites like Kickstarter remove that hassle, but it’s not the only reason why people are attracted to them. If you have are trying to launch a technology start up in Sheffield you probably have more affinity with the philosophy of Kickstarter than the Alan Partridge stereotype of a traditional bank manager.”
However, as more people join the crowdfunding bandwagon, there are fears that what started off as small-scale community finance is in danger of being taken over by the big boys of the investment world. “The crowdfunding model is definitely becoming increasingly professional with many of the larger websites attracting the interests of major venture capitalists,” adds Shone. “They have millions to invest and they are looking for ideas and products that are going to make them a return. In that world, many of the smaller, more homespun projects could well be squeezed out of the market place.”
Leading crowdfunding website Seedrs, which is backed by fund manager Neil Woodford, was recently named as the top investor in private companies in the UK. It and its nearest rival Crowdcube were only founded in 2012 and 2011, but last year they funded more than 250 companies. In fact such is the power of the online investor that it has been blamed for a decline in the number of small firms joining the City’s junior stock market.
In the past AIM has been a key source of cash for growing firms – as it allows them to sell shares to the public – but experts believe that a slump in the number of listings could well be down to sites like Kickstarter which let the public invest directly in private companies. However, while the number of million pound plus crowdfunding projects is on the rise, for some it’s impossible to put a price on the real beauty of pooling resources.
On Boxing Day 2016, Ed Chadwick watched as flood water swept through the Calder Valley leaving his home, his gallery and his beloved allotment all underwater. When the water level finally dropped, the extent of the damage became clear and for a while Ed admits he wasn’t sure what the future would hold. “That was when a friend of ours set up a crowdfunding site,” says Ed, who runs the Snug Gallery in Hebden Bridge. “I wasn’t sure that anyone would be that interested, but in the end we had donations of more than £6,500. The response was phenomenal.
"We had been flooded before and the cost a full insurance policy was just so prohibitive for a business like ours that I don’t know what we would have done without the crowdfunding campaign. Well actually I do know. We wouldn’t be here now. “The money people donated not only paid for repairs, but it also bought us some breathing space so that we could survive until visitor numbers returned to normal. And you know this wasn’t just about us. We support a lot of local designers and craftspeople and if the shop and gallery had been forced to shut, the ripple effect would have affected them too. “We had donations from lots of other galleries, but also from complete strangers too and it wasn’t just the money which meant a lot. The messages people posted along with their donations were a complete morale boost. I hope we never have to rely on anything like that again, but the whole experience was completely humbling.”
Read more at: http://www.yorkshirepost.co.uk/news/analysis/from-cancer-treatment-to-restaurant-openings-how-crowdfunding-turned-us-all-into-investors-1-8392223