8.8 Weighing up the pros and cons

Business owners need to consider the advantage of keeping control of their projects and their business against receiving expert advice, support and access to a large amount of funding from a venture capital firm or business angel.

Through crowdfunding, businesses get feedback and comments on goods and services from their investors who are also customers and can become advocates, which in turn helps to develop the business further.

Relatively speaking, crowdfunding is still in its early stages although it has undoubtedly filled a much needed funding gap for small and medium-sized enterprises (SMEs). There have been many successes where an exit route has created value for the original investors. For example, E-Car Club, an electric car-sharing company that raised £100 000 in equity on the platform Crowdcube, was later acquired by the rental group Europcar. However, there have been spectacular failures (e.g. iBackPack which was to provide charging and hotspots on the go), and also some famous scams too (e.g. Cataldo’s Cancer).