Money raised by entrepreneurs via crowdfunding has topped the £1 billion mark in the past two years, according to the latest figures.
As a result many businesses have had a solid foundation on which to build and develop, helped by the continued growth of crowdfunding as a concept.
The number of websites on both sides of the Atlantic offering to generate funds has more than doubled in both 2012 and 2013, according to the researchers from Cambridge University and from Berkeley in California, USA.
They analysed the alternative finance market and believe £1.6 billion in funds could be offered by the end of the current year, despite regulators looking to impose themselves on the market.
Authority concerns
The Financial Conduct Authority has expressed concerns that a lack of financial controls and a lack of understanding are seeing companies take advantage of unsuspecting donors.
As a result, an industry code of conduct could be introduced to highlight the key aspects of online pitching and to provide in-depth details into how the concept works.
It works by investors pulling together to pledge cash on the basis that a company reaches a specific target – failing to reach the goal means no money changes hands.
The importance of financial management
Financial management, of both businesses and at a smaller scale, is incredibly important and crowdfunding provides yet another potential source of money if used correctly.
Alternatively, controlling finance with a prepaid card can provide additional security and peace of mind, while ensuring that any purchases never go beyond budget.
This level of financial security gives businesses and individuals a way of protecting themselves should something go awry.
The future of the concept
Crowdfunding can see an investor take on an equity stake in a business or just pay in as a goodwill gesture.
It can be a quick way to provide much needed finance to many businesses and entrepreneurs who are keen to expand their ideas.
A new regulatory framework could provide additional protection to those looking to use these methods to raise funds, while ensuring that investors do not lose out unexpectedly.
Funding that is done online via these methods is often uncontrolled when it comes to how it is spent, meaning it can be piled into particular ventures and ideas.
As a result, innovation and the development of new concepts can take place, advancing the economy and building businesses in the process.
It seems highly likely that the concept will only increase in popularity and that should bring about long term success for those individuals that rely on it for both their business futures and their own.
