London is the Crowdfunding capital of the world

Entrepreneurs 15/08/2014 @ 9:00AM
Jason Hesse Contributor

London has overtaken New York City and San Francisco to become the world capital of crowdfunding. Britain is home to around 80 different crowdfunding platforms, with the two biggest players by far Crowdcube and Seedrs.

At a recent event held by The Crowdfunding Centre in London, an interactive map showing crowdfunding’s spread and distribution was unveiled. London is the top city, with local businesses and start-ups creating more campaigns during July 2014 than any other city.

Just over 250,000 crowdfunding campaigns were launched internationally in 2014 with London leading the charge, with 12 new crowdfunding projects launching on average each day.

The average amount raised was $17,834, with an average fully-funded success rate of 32%.

Barry James, founder and CEO of The Crowdfunding Centre, attributes London’s lead to the city’s start-up community embracing crowdfunding as an alternative way to raise funds.

“It’s clear from the figures that the hyper-connectivity of the start-up community in London is helping. There is also the fact that compared to the US, where centres of excellence are scattered around the East and West coasts, London has become a centre of many specialisms.”

In particular, the data shows that London is a leader for crowdfunding projects in the business, technology, publishing and gaming industries – all fast-growth areas.

Discussing the findings, Dr Richard Swart, a crowdfunding and alternative finance expert from University of California, Berkeley, said the research findings come as no surprise: “London and the UK are continuing the growth documented in our research. It is becoming clear the UK is leading the market in many respects.”

The UK government is not ignoring this. George Osborne, the UK’s Chancellor of the Exchequer, said that the UK is ready to challenge US dominance in crowdfunding:

“We stand at the dawn of a new era of innovative finance. Setting the objective of the UK leading the world, London has become the world capital of crowdfunding. The technologies being developed today will revolutionise the way we bank, the way we invest, the way companies raise money. It will lead to new products, new services, new lenders.”

Britain is embracing crowdfunding and it has grown extremely quickly in the UK over the last few years, by more than 600% between 2012 and 2013, from just under £4m raised in 2012 to more than £28m in 2013.

This fast growth has caught the government’s attention, with the Financial Conduct Authority – the UK financial service regulator – releasing new rules to regulate both crowdfunding and peer-to-peer funding platforms.

Before the FCA’s rules, some crowdfunding activity had been unregulated, some regulated, and some of it exempt from regulation. These new rules were widely welcomed by crowdfunding platforms, making the model more accessible to everyday investors.

“[The UK] is the best jurisdiction for crowdfunding in the world,” says Jeff Lynn, the American-born founder of Seedrs. “The US and the rest of Europe are far behind the UK, which has a sensible regime that protects investors while still creating a commercial model in which to operate. Hats off to the government for their enthusiasm.”

Crowdfunding is not just happening in London it is taking off in Sydney.

funding4business the new peer-to-peer crowdfunding marketplace launched in Australia and New Zealand in 2014 and is the only platform designed to provide business loans, start-up seed and equity funding, and crowd-funded business loans to Aussie and Kiwi enterprises.

funding4business connects business borrowers to lenders and investors directly, by matching investing and borrowing criteria, which then allows businesses and investors to negotiate the terms and conditions of the loan or investment at mutually acceptable interest rates and repayment terms.

With the funding4business peer-to-peer marketplace there are no banks, no middleman and no hidden fees. Listing in funding4business peer-to-peer marketplace for both investors and for businesses seeking loans is simple, quick and free.