ONE in five entrepreneurs view crowdfunding as the most viable fundraising strategy for their business, research claims.
EY’s 2018 Fast Growth Tracker – an online poll of 380 UK business owners on their fundraising and business plans – found 20 per cent favoured crowdfunding as a viable funding source compared with 19 per cent who cited traditional bank financing.
The majority of firms polled, 75 per cent, said they favoured traditional equity financing via venture capital firms.
51 per cent of business leaders said they found funding to be their biggest barrier to expansion, but the number seeking to actively raise funds was down on last year at 66 per cent compared with 71 per cent in 2017.
Of those who wanted to raise funds, 81 per cent were looking for a minimum of a £5m and 19 per cent sought up to £10m.
“The good news is that there are more sources of capital available to fast-growth, entrepreneurial companies than ever before,” Richard Goold, fast growth leader for EY, said.
“In the last couple of years, in particular, we have seen the number of funding options multiply, which has prompted some business owners to opt for a hybrid funding model – using crowdfunding to supplement venture or angel capital, for example.
“When it comes to funding, the main challenge for the entrepreneurial community is supporting start-ups with capital, in order for them to scale up.
“Some investors seem unwilling to take the chance on businesses that are still in the seed stages of growth, perhaps because of the level of risk involved, but in reality they are often the ones that need it most.”