Skip to 0 minutes and 3 secondsIn recent years new forms of financial support have emerged. These are called crowdfunding or crowdsourcing, and they are especially popular within newly formed smaller businesses. I think today, actually, there's more options than there ever was before. The start and the proliferation of crowdfunding sites, the different ways that you can obtain early-stage funding. If you've got a great plan, and you're investable yourself, and you have a good business idea and business plan, then there are lots of potential areas to be able to, first of all, kickstart that idea, and then get that funding. Crowdfunding is where a business offers interested parties a chance to support projects and ideas and gives the supporters a range of rewards, but not necessarily financial ones.

Skip to 0 minutes and 53 secondsThe most well-known examples of crowdfunding sites are Kickstarter and Indiegogo. Here, people with ideas showcase their projects and effectively advertise these to encourage people to put in small or large amounts of cash to help finance products ranging from video games, music, film, art, and other similar fields. The advantage of crowdfunding is that the business owners have a limited commitment to the investors and are not answerable to them in the way they are to shareholders and banks. We've introduced some of the main sources of finance for entrepreneurs seeking funding to finance business growth. Each one has advantages and disadvantages. Obtaining advice about appropriate funding sources for the individual businesses' circumstances is essential for entrepreneurs.

Skip to 1 minute and 52 secondsBusiness advisers, such as accountants, are well-placed to provide advice. They may also suggest other funding sources that we have not covered here, such as trade and export finance, and government funding such as grants.

Financing growth: crowdfunding

Borrowing money always comes with some risks, particularly in periods of financial uncertainty.

Loans can be hard to come by in a challenging business environment. In some circumstances the demands of lenders can also constrain the business’s freedom to develop and expand.

In this video, Alice and our business experts consider some of the innovative new methods of finding financial support that have emerged in recent years, of which the most well known is crowdfunding.

What’s next?

We’ve seen that there are many sources of funding available to grow a business. But how do investors decide which organisations should get their money? In the next step we’ll consider how investors assess a business.

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This video is from the free online course:

The Importance of Money in Business

University of Leeds