Customers and angels – new sources of early stage capital?


May 31, 2012

The media’s attention to crowdfunding has not diminished in recent weeks. GigaOm published three articles this week on the topic. One article is about the trend of raising capital from customers. Instead of raising money from venture capitalists or angel to build a product, entrepreneurs can reach out to customers before the product is actually produced.


The idea is that customers pre-order products, products that don’t actually exist yet. The funders or customers do not receive equity, rather the get the product or a gift. The capital is raised on platforms like Kickstarter, which we covered recently here on Dealmarket Digest, which originally marketed creative projects and recently added consumer-oriented projects.


Two other platforms were profiled this time ones for startup companies. It profiled Fundable, a US-based platform that offers equity and/or rewards to crowdfunders.


And in a third article it profiled Seeders, an FSA authorized crowdfunding platform for businesses that are willing to trade equity for capital. It recently raised GBP1 million from DFJ Esprit, Luke Johnson’s Digital Prophets, and a number of angels.


Over in the UK, the Telegraph reported that Funding Circle, is currently lending more than GBP 1 million per week to small businesses, raising the money from private individuals who can lend a minimum of just GBP20.


Since it was launched in 2010, Funding Circle has lent a total of £32m to 750 firms. And Crowdcube, which enables individuals to invest smaller amounts for a slice of equity, so far providing GBP 2.8 million in funding to 18 firms.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedIn