An alternative funding scheme for new start-ups has received a significant amount of investment from more than 150 investors. Crowdcube.com was created in 2010 as a way to provide business funding for new businesses, to prevent the competition for business funding from banks and venture capital funding.

In only 10 days, Crowdcube have received investments with a value of £300,000 from 162 investors, which will be utilised in the next stage of development for the company. The company acts as a connection between “Armchair Dragons” and companies who require an alternative source of finance. Companies who are based in the UK register with the site in order to raise funding. People who want to make an investment in a new company can do so in return for shares in a UK based business.

The aim of the scheme is to provide an alternative method of applying for funding, without competing for bank finance which is expensive and not easy to secure. Angel and venture capital funding is extremely competitive, with tough conditions to meet. The business secretary, Vince Cable recently made an announcement which introduced a new taskforce which would have a focus on crowd-funding and make it easier to obtain finance in the future, which indicates huge changes for business finance.

According to the co-founder and CEO of Crowdcube, Darren Westlake, traditional sources of finance often create barriers, which hinder the growth of small businesses. Since its launch, Crowdcube has raised £1.7 million for nine small companies.

Want to learn more?

Subscribe to our newsletter to get accounting tips like this right to your inbox