News

How innovative businesses are turning crowd finance into opportunity

October 12, 2016 • By TAB team

Over the past decade, the crowd finance industry has grown dramatically and is now providing billions of dollars to businesses, projects, and causes which otherwise might never have got off the ground. It has also harnessed the enthusiasm and collective wealth of millions of individual investors worldwide.

Over the past decade, the crowd finance industry has grown dramatically and is now providing billions of dollars to businesses, projects, and causes which otherwise might never have got off the ground. It has also harnessed the enthusiasm and collective wealth of millions of individual investors worldwide.

As the industry has grown, demand for auxiliary services that provide advice and support to those raising or investing, has erupted. In response, an ecosystem of new businesses and solutions has emerged to meet these demands.

At Crowdsurfer, we love providing the data intelligence that fuels the growth of this ecosystem. Auxiliary services provide welcome support to platforms, extending the reach of crowd finance and helping the industry's movement into the mainstream.

Here is a look at some of the business types evolving within a new ecosystem dedicated to serving the fundraisers:

Marketing agencies

Crowd finance is making business financing public, an activity that has traditionally been done behind closed doors.

This shift to public financing presents businesses with a very traditional marketing challenge; reaching the right target audience for a business/product and positioning it in the way most likely to attract commitment (in this case investment).

Marketing agencies across the world have responded to this need, including Blazon PR, Command Partners, Dynamo PR, The Creative Collective, Tribefirst and Woodshed Agency. These agencies and many others have developed services to help deliver successful rewards and equity based crowd finance campaigns, adapting traditional marketing and communication activity to help businesses create a community of potential investors, buyers and advocates.

These businesses have proved popular with campaign owners and have delivered hundreds of successful campaigns and hundreds of millions of dollars in business funding. In many cases marketing agencies continue working with their clients long after the initial raise has been completed.

Marketing ad firms

An extension of the marketing agency group, these organisations provide advertising services which help a very specific part of audience outreach, namely advertising campaigns for digital channels such as Facebook, Twitter, Google and LinkedIn.

Social networks have evolved over recent years to offer great ways to target individuals with specific job titles, interests and other characteristics (location, gender, age, etc). However, creating targeted campaigns and optimising them to be successful can be time consuming and laced with trial and error.

To help campaign owners, outsourced ad management businesses such as Jellop, Funded Today and Crowdreach are offering their expertise and monitoring services to ensure that advertising campaigns are optimised to deliver results. In some cases, campaign owners have enjoyed a return on ad investment of up to $10 for every $1 spent.

Traditional corporate finance

With equity and debt based crowd finance continuing to grow and fill the sizeable gap in business financing, the corporate finance community is extending advisory services to cater for this new funding channel.

Providing traditional financing advice, including calculating fair terms for a raise and connecting businesses with the right venues for financing, these firms are already helping hundreds of businesses get the financing they need from the crowd finance market. These advisors range from crowd finance specialists such as Racefields, Assemble Advisory and Ludgate Finance, through to more established players like Kingston Smith.

The next wave

These groups all support businesses to find the funding they need. The next stage of the ecosystem's development will be to support these crowdfunding companies as they put this finance to work.

Here as well, we see organisations responding to demand, with many traditional businesses starting to adapt their products to this audience.

These include:

  • Distribution businesses
  • Insurance providers
  • Law firms
  • Other services targeted towards SMEs

As crowd finance continues to grow, we can expect to see the ecosystem of auxiliary services to continue to expand. We look forward to continuing to support this growth.

If you are part of this ecosystem, please get in touch.