With Brexit occurring, more and more investors are less willing to invest due to the economic turbulence. However, crowdfunding is offering an alternative to the traditional services in response to difficulties that may be faced by enterprises attempting to generate funding.
Fintech continues to disrupt and revolutionise traditional services. The accessibility, mobility and technology has made it possible for a new generation to engage directly and donate or invest in a campaign they personally have an interest in. Crowdfunding has democratized the movement of funding from institutions to smaller micro investors.
Ultimately, Fintech Equity crowdfunding provides a platform that allows donors to invest money in exchange for equity in the venture.
Fintech equity crowdfunding will help firms attract loyal customers. Through allowing their customers to become shareholders, they are also ensuring the customer will be loyal to their product therefore increasing the number of engaged customers as well as funding their ventures.
Many fear Fintech Crowdfunding will replace venture capital firms. SME’s have direct access to crowds of investors, who invest at any stage of business (Seed, development and most recently IPO). According to Business Insider Investment levels in Fintech are not only increasing but they are becoming favoured investment among VC’s and angels.
Beauhurst’s research shows that Equity crowdfunding investors are happy with lower equity stakes for the same investment in comparison with traditional investors.
Crowdexpert (2016) reports the total Global Crowdfunding Industry estimated fundraising volume in 2015 is $34 Billion, with real estate crowdfunding growing by 156% in 2014, just breaking the $1 billion mark, with campaigns ranging in size from less than $100,000 to over $25 million. Equity crowdfunding is expected to continue growing this year, especially considering Brexit.. More regulation will be implemented into this sector by the FCA to increase transparency and protection.