Crowd-funded investment

An investment that is raised via an online platform and not secured against an asset (a building or equipment). A ‘crowd’ of individual investors put (mostly) small amounts towards a loan to your organisation and you repay it on an agreed basis, usually with interest on top.

When might I use it?

Unsecured loans can be used for a range of purposes. Crowdfunding loans are a particularly useful way to raise small amounts (£5,000 - £50,000) relatively quickly.

Where can I get it from?

Specialists platforms, such as Ethex, Crowdfunder and Community Chest - offer opportunities to crowdfund with match funding from Big Society Capital. Some mainstream peer-to-peer business lenders may also lend to charities and social enterprises.

Pros

  • A crowd of supportive investors may be more likely to provide you with the amount of investment you want on the terms you want it than an institutional investor

  • Investors in social crowdfunding are likely to be supporters and also potential customers for your organisation                                 

Cons

  • Takes time and effort to get investors interested, particularly if you don’t already have a large group of supporters

  • Difficult to raise large amounts through crowdfunding unless your crowd is huge and/or very wealthy

More information