It sounds like crowdfunding gone mad, but the first crowdfunding fund to invest in crowdfund start-ups is ready to launch. The Crowdcube Venture Fund is looking to raise a £5 million war chest to finance new projects. Crowdfunding lets a group of investors pool funds to put into new projects to spread the risk of getting in on the ground-floor of a new venture. Several online platforms specialise in raising cash for firms and projects that cannot attract debt funding from banks. Crowdfunding takes several forms – from taking an equity stake to donating money to entrepreneurs pitching for finance. Wrapping investments in SEIS The Crowdcube venture can also wrap investments in the Seed Enterprise Investment Scheme or Enterprise Investment Scheme. Both offer generous tax breaks to investors putting cash into qualifying companies to make the opportunity even more financially attractive. Crowdcube’s fund is running a joint venture with the Braveheart Investment Group. Darren Westlake, CEO and co-founder of Crowdcube, said: “The intention is to offer everyday investors with choice. “They can invest in a fully-managed fund. The idea is to attract investors who want to be involved in equity crowdfunding but don’t have the time or resources to fully research opportunities to create their own diversified portfolio.” Spreading the risk One of the issues of SEIS and crowdfunding is due diligence before investing can cost up to 10% of the value of the investment. With the SEIS cap of £100,000 a tax year, this can add a disproportionate cost to the investment which needs to be considered as part of the return. The new fund will take multiples of £2,500, and investors can top-up their initial input over a two-year timescale. Crowdcube reports that the equity platform has raised more than £17 million for 90 start-ups from more than 57,000 registered investors. Geoffrey Thomson, chief executive of Braveheart, said: ‘There are a number of investors who like the crowdfunding concept but who, for one reason or another, find the DIY route a problem. We hope they find this new initiative of interest.” The fund will have set-up and ongoing administrative charges. The Crowdcube web site reckons investors will pick up a 7% over a five-year investment in the new fund. The platform points out that crowdfunding is only for sophisticated investors who must understand the risks of taking part in start-up businesses that have a high drop-off rate over first three years of trading.
25 January 2014
By Roz Tappenden BBC South
Crowdfunding has been used to kick-start a range of ventures – investors have been tapped for everything from concerts to computer games – but have you ever heard of crowdfunding for cows?
That’s what is being proposed by Hampshire micro-dairy founder Nick Snelgar who is raising funds for a milking herd.
His community interest company promises £80-worth of milk a year to local people willing to loan £1,000 for a whole animal, while those living further afield will be paid interest in the form of cheese in the post.
In the US, farmers have been known to use crowdfunding to expand their businesses but, despite its growing popularity, the UK’s farming community is yet to embrace it.
‘Like a racehorse’
The National Farmers Union (NFU) called the move “highly unusual”.
“It’s a bit like owning a racehorse,” said Mr Snelgar, returning from his delivery round.
“For a tenner – that buys you a cow’s whisker. For a thousand, you can buy a cow.”
In reality, backers will never own ‘their’ cow but £10 will gain them entry to an open day. Larger amounts will earn one-off consignments of milk, cow milking lessons or a chance to name the company van.
Mr Snelgar’s micro-dairy has been running for four months, supplying 20 local shops, businesses and even a theatre with Maple Field Milk and he has just begun making doorstep deliveries.
But with only three cows of his own, his three-day-a-week production relies on milk from a nearby farm.
His ambition is to raise enough money for 15 cows, which would produce about 1,000 litres a week.
Before venturing into the precarious world of dairy farming, Mr Snelgar helped set up Futurefarms – a food co-operative – in his tiny village of Martin, near Fordingbridge. Its members’ aim is to produce as much of their daily diet as possible from within their parish boundary.
He said: “What we were missing was a dairy farmer – they’ve all gone out of business.”
It was then that the idea of crowdfunding for cows came about.
Emily Smith, of crowdfunding website Crowdfunder, said: “We’ve had lots of veg bag schemes and environmental projects but I’ve never heard of crowdfunding for a dairy herd.
“We used to run a site called PeopleFundIt which had a listing for Jersey Beef. They were crowdfunding to start their farm and raised £2,000.
“We are now thinking of doing a similar campaign where investors would effectively buy the meat in advance.”
A spokesman for NFU South East said: “This is highly unusual and must be appealing to people who want to make ethical, transparent investments.
“We haven’t come across mainstream farm businesses, or indeed would-be farmers, using crowdfunding.
“But the idea is not dissimilar to the fundraising seen in recent years by community shops – local people responded to appeals to buy shares in their village shop, to secure its future as a community asset.
Nick Snelgar’s week is a busy one – collecting and pasteurising milk from Whitey Top Farm on Sundays, Tuesdays and Thursdays and delivering the milk in his refrigerated van on Mondays, Wednesdays and Fridays.
He is in the process of training someone to take over some of the workload and has already built a mobile milking machine to minimise the time his cows are away from their pasture.
“I’ve been looking at crowdfunding for a long time,” he said.
“It seems particularly obvious when you are working with a community business project like we are – it allows people to get involved.”
“Why might this be happening? Well, we know that many new entrants struggle to make the investment necessary to start out in farming.
“While there are new entrant support schemes in Wales and in Scotland, here in England there are just a handful of charities offering limited help with training and business opportunities.”
Maple Field Milk was launched in 2012, with the help of the Princes Countryside Fund, when milk prices were high on the national agenda.
A backlash against wholesale price cuts shone a light on the issue and Mr Snelgar’s aim was to create an alternative market, offering farmers 38p a litre – about 7p a litre more than the price offered by some big suppliers.
“It’s not a massive amount but you have got to start somewhere,” he said.
“It goes from cow to consumer in 24 hours. We are on the same shelf as the other milk and it’s the same price.
“It will be enough to live on if we manage to produce and sell 1,000 litres a week.”
And with capacity to cope with five micro-herds, each producing 1,000 litres per week, Mr Snelgar hopes his project will encourage more newcomers to the industry.
“We are campaigners for a better life for the farmer and want to encourage other people to go into it,” he said.
Source : BBC
One of the trends in the burgeoning United Kingdom crowdfunding market has been the arrival of specialist platforms focusing on ventures delivering social, environmental or scientific benefits.
The emerging players include Abundance Generation, which has so far facilitated the funding of five renewable energy projects within the UK. On this platform, investors commit cash via 20-25 year transferrable debentures (debt instruments) and these can be bought and sold via the site.
Meanwhile, equity crowdfunding platform Crowdmission.com specialises in ventures offering an “an obvious benefit to society, health or the environment.” Or to put it another way, businesses that make a difference. Once again, green energy is a major theme but the remit runs to scientific projects and businesses supporting charitable activity.
In some cases, the line is blurred between Kickstarter-style donations-based crowdfunding and more commercial models. For instance, Buzzbnk.org – which supports a range of socially beneficial projects – is primarily a donations platform, but businesses or projects can also raise funding from the community via repayable loans.
Crowdmission.com entrepreneur Karen Darby believes there is a real appetite for investment opportunities that combine the potential of a return with involvement in a project that will deliver beneficial outcomes. “I think what we’re seeing is a new generation of entrepreneurs who are interested in starting businesses that will have a social impact but they also want to be able to benefit personally. Equally, I believe there are investors who want to become involved with companies delivering a social good but who want to see a return.”
Darby has a certain amount of form in this area. In 2003 she set up utilities price comparison service Simply Switch with a remit to establish call centres in one of Britain’s most deprived areas. Backed by ‘impact’ fund manager Bridges Community Ventures, the business created 100 jobs and was ultimately sold to Daily Mail newspaper group for £22m.
As she sees it, Simply Switch ticked two important boxes. First and foremost it made a difference by creating jobs where they were needed most, but it also produced a 22 fold return for its investors. It’s a principle she believes can equally be applied to the Crowdfunding model.
The United Kingdom already has a flourishing ‘social enterprise’ sector, which according to the government’s Small Business Survey carried out in 2012 embraces around 70,000 businesses, contributing more than £18bn to the economy. Social Enterprises, by strict definition, are operated on commercial lines but crucially their profits are reinvested rather than being returned to investors. Equally when social enterprises are sold there is no cash-generating exit event for the founder. “A lot of entrepreneurs are disillusioned by that model,” adds Darby. “They want to be able to benefit from the work they’ve done.”
However, as she acknowledges, there potential tensions in creating a business with a social mission that is also intended to deliver returns, not least when the entrepreneur exits. “We didn’t have a mission lock on Simply Switch,” she recalls. Without a mission lock, when a business the new owners aren’t bound by the original remit. However, this can be built into sale agreements.
For would-be investors or lenders, the presence of sites such as Crowdmission and Abundance Energy provide a rapid way to tap into projects that are of personal interest. But what about the companies? Why go to a relatively small – if ambitious platform – when well established players such as Crowdcube or Funding Circle are also open to, say, green-technology or bio-science enterprises?
Darby says it’s partly about hooking up with investors who are sympathetic to the vision and potentially also prepared to go in for the long-haul before seeing any return. “If you have investors who are not entirely motivated by financial gain, they are likely to be more patient,” says Darby.
From one perspective, crowdfunding sites that set out to back ‘impact’ business while also offering a return are a natural extension of donations platforms but with the added piquancy of a potential return. With further growth expected in the equity and debt crowdfunding market in 2014, it will be interesting to see if these specialist operators can succeed in carving out a niche.
Source : Forbes
Renewable energy crowdfunding platform Abundance Generation has opened a new solar project in Kent for funding, offering a “win win” for investors.
The development requires up to £730,000 for the installation of an initial two 249 kilowatt (kW) sites, and £1.13m to build a possible third third on the Isle of Wight.
Abundance offers debentures – bonds or debts lent to wind farms or the solar projects that are then secured on a share of the revenue that each project generates over its lifetime. People can invest as little as £5.
The firm’s previous six projects have collectively raised over £3m for renewable energy projects. Construction begins this month for the first two new sites.
Bruce Davis, co-founder and joint managing director of Abundance, said the investment is perfect for people “who are watching their savings shrink and their investments go up and down like yo-yos.
He added, “By having a direct link to [the retail price index] each year plus interest on top, this latest project means investors will beat inflation (before tax), while knowing their money is being put to productive use – in Britain’s real economy, in the production of renewable energy.
“This is a big ‘win win’ for our investors and the smaller renewable energy developers they are investing in, and the kind of healthier financial service – cutting out the City’s unnecessary and expensive middlemen – that this country needs much more of if we are all to benefit from the economic recovery and a sustainable future.”
The new solar sites are projects by Dublin-based firm BNRG Renewables. It is the second BNRG project to be offered through Abundance. The first – BNRG Hoo Solar, also in Kent – raised its full target of £385,000 March 2013.
In September, Hoo Solar paid its first cash return to investors at 8.4% over the amount it was projected to.
In November, Abundance announced it had reached its £500,000 target to fund the installation of solar panels on 20 community buildings in Nottingham in just under a month.
A new theatre company has launched a crowdfunding campaign to raise £16,000 to provide drama workshops for people with mental health problems.
Untapped Theatre Company is specifically designed for people with mental health vulnerabilities to enable them to work alongside others in the community to explore their creativity and develop dramatic skills.
The theatre group will offer weekly writing, drama and theatre workshops and will put on monthly high quality productions in the studio theatre at Matthew’s Yard and The Edge.
It was founded last month by local writer and creative arts workshop leader Sarah Milne and performance artist Norrin Radd.
They are working with Untapped, a Croydon-based social enterprise that brings art and craft workshops, activities and training to vulnerable community groups across the borough.
They need to raise £16,000 to fund the project by the end of the year and are offering a set of unique gifts such as tickets, drinks with the cast, signed scripts and limited edition prints and t-shirts in return for donations.
The first sum of money will fund the theatre group’s first big production in April.
Miss Milne, 43, said: “We hope to use the medium of drama and theatre to break down barriers between different groups in society and challenge the stigma associated with mental health.
“This will be a platform for people to express their talent and including everyone when the group performs people won’t know who suffers from schizophrenic or depression.
We hope to do productions in schools and to have discussions with pupils afterwards about mental health.”
Mr Radd has suffered from depression and was diagnosed as suffering from chronic schizophrenia in early adulthood.
“A lot of people are being diagnosed with mental illness and this group will show those interested in the arts they are not on the scrap heap. We hope to empower people and restore their confidence.”