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Insights EDU

How to Raise Millions in Investment – Without Relying on VCs

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Rachel Loosley | Content Creator | Crowdcube

02 Aug 2019 | 4 min read

While AR and VR technology has been on the rise for some time now, it can still be a challenge for emerging businesses to secure finance. As Patrick O’Luanaigh, CEO of nDreams, said in a recent article on AIXR: “Virtual reality is heading towards a “hockey stick” moment.” In other words, we should see major developments in the near future which propel this technology into the mass market. With lack of funding being one of the key barriers to success, the race to dominate this emerging space is on. Here, we look at the startups that have leveraged crowdfunding to raise millions in investment through Crowdcube. 

Crowdfunding can Help SMEs Raise Millions and Grow Quickly 

As one of the UK’s leading equity crowdfunding platforms, we fuel the growth of a variety of amazing businesses in emerging technologies. For example, cleantech has become one of our most popular sectors over the last couple of years, with many companies using AI to help generate renewable energy. Verv, who raised over £760k with us in 2018, use AI technology to analyse electricity data and appliance usage in the home. Similarly, Small Robot Company, pictured above, is working to reduce farming’s impact on the environment with the help of robots and AI. The latter successfully raised £1.17m with us in 2018, thanks to 1,159 investors. 

In immersive technology we’re seeing a widespread level of support for VR films and experiences that focus on social good, AIXR have previously covered the movement toward socially conscious VR experiences with case studies from VR Social Impact Award finalists at the VR Awards. Similarly, businesses seeking to harness technology for social good, like Verv and Small Robot Company, have proven to be very popular on our platform. 

This is something that companies like Oculus are already experimenting with through their VR for Good initiative. The programs they’re developing include VR simulations in the medical field to help train staff on high-stake, emergency procedures, as well as interactive learning tools for the classroom. These tech enterprises with social welfare at the heart resonate particularly well with our investors. 

Brand Awareness, Amplified Marketing and Increased Engagement 

We’ve fueled the growth of many businesses, helping them along to raise millions, some of these companies struggled to secure traditional investment. Many entrepreneurs now recognise the value of crowdfunding and are using it as part of a broader funding strategy, consolidating investment from multiple sources including VCs and other financial institutions. 

There are lots of other unexpected benefits to be had from opening up your business to the crowd. When talking to our Funded Club members, one aspect they mention is the positive impact on customer engagement. Giles Humphries, Co-founder of Mindful Chef, explains more about his experience: “that one week had the highest amount of hits to the website, the highest amount of new users, new accounts set up, new paying subscribers – you just see it there and then. The real benefits are that you see a huge leap in the people trying your service.” This exposure to a new audience has proven to be a golden bullet for brand awareness and engagement. 

On the immediate effect of successfully raising investment through crowdfunding: “that one week had the highest amount of hits to the website, the highest amount of new users, new accounts set up, new paying subscribers – you just see it there and then. The real benefits are that you see a huge leap in the people trying your service.” – Giles Humphries, Co-Founder of Mindful Chef

This engagement leads to brand advocacy and loyalty, as Giles can also attest to: “The main positive for me is having the network effect of brand ambassadors who are completely behind your business.” This can also help make subsequent funding rounds more straightforward, as that solid foundation is already in place. Generally, this isn’t something that comes alongside more traditional routes to finance. 

Crowdfunding is the Perfect Platform for Everyday Investors 

It’s not just entrepreneurs who benefit from crowdfunding, but our investors too. By opening up these types of investment opportunities, everyday investors can join these businesses on their journey alongside professional investors and institutions. In return for their pledge, investors receive shares in the business. Hopefully, the value of the company will increase over time and the business will go on to make an exit at a higher value, generating a return on that investment.

If you’re thinking about making an investment It’s very important to ensure that you invest aware, as investments of this nature carry risk to your capital. Take a look at our current investment opportunities, here

You can invest from as little as £10, allowing everyone to back the businesses they believe in, this gives companies who are operating in non-traditional markets the opportunity to grow and find investment where they otherwise may have struggled in securing funding through traditional routes. For investors, it’s also a great way of finding exciting new ventures to get behind, many of whom offer investor rewards as well as equity. You can play a crucial role in a company’s journey, as they push on to raise millions in investment through a combination of crowdfunding and investment from traditional financial institutions. 

Eligible investors can also earn up to 50% tax relief on your investments when investing through Crowdcube. Many of the businesses who raise with us qualify for EIS and SEIS, giving investors 30% or 50% tax relief. This has proven to be a big draw, especially for our more prolific investors. 

We’ve worked hard to streamline our process to make raising funds as simple as possible. Our expert team are with our entrepreneurs every step of the way. With London being both home to the majority of our investor base and the leading European hub for immersive entertainment, the opportunity is huge. 

If you’re interested in speaking to someone from the Crowdcube team about crowdfunding, please get in touch here

About the author:

Crowdcube is a leading equity crowdfunding platform for entrepreneurs of start-ups and growing businesses to connect with potential investors. Dedicated to helping UK-based entrepreneurs raise finance to start or grow their business, Crowdcube gives investors real equity in the companies they fund.

Crowdcube uses the web-based notion of ‘crowdfunding’ where a community of like minded people pool their money and knowledge together to back an idea, business or person.

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