A Guide to Crowdfunding, Part One

Iglika Ghouse, the founder of USPAAH, describes crowdfunding and explains how it can kickstart a business, taking a business from motivation to market.

Why you should crowdfund your start-up...

Why did we crowdfund our startup? In short, because that was the best and only option available for an early-stage startup like us. To give you a bit of background, USPAAH launched in early 2016, and by the summer of 2016, we had a few thousand users and some early revenue. And we thought great, we can now approach all these “Early Stage funds” who say they invest even at the “idea stage” and upon seeing our traction, they will write us a check immediately to fund our growth, since we have a proven concept. In reality, this is not the case at all, and that’s not just my opinion. I’ve spoken to many founders in London that start off with the impression that there is ample financing available, only to find out after 25 meetings that that’s reserved for a very small selection of serial entrepreneurs. 

So if you’re a first-time founder, with no track record, you will quickly find out that the investment options available to you are rather limited, and a lot of VCs and Angel Funds are not at all as willing to put skin in the game as early as they say on their websites. This is where Crowdfunding comes in and in my opinion fills in a very significant and large gap in the Startup Funding Ecosystem. The gap between friends and family finance, and potential series A. The gap for companies that have clients/growth, but are not yet at the £1mm revenue mark that most “early-stage” funds want you to be. I mean how can you even call a company that’s making £1mm a year “early-stage”?? 

Anyway, that’s another story. Crowdfunding is a great option if you have a product or service that is aimed at consumers. People love investing in something they can touch, smell, experience. They love seeing the personal story of the team, and the crowdfunding platform makes it accessible for anyone to buy a piece of the company with as little as £10! it’s pretty amazing actually that the UK allows this and even offers up to 50% tax incentives for people who invest in early startups. Not many other countries do that, so take advantage of that and utilise the power of the crowd for your business.

Next week, Iglika will walk through essential preparation for crowdfunding.