At Harper Macleod, we've been banging on about the potential of crowdfunding for a few years now, and for a while it felt like no-one was listening.
However, we never wavered in our belief that there really was something substantial in it, ready to take off. That tipping point may now have arrived, and businesses in Scotland have every chance to take advantage.
This week saw a new world record for a crowdfund, and the identity of the company in question is an indication of the industry's growing appeal.
Crowdcube, the world's leading investment crowdfunding platform, made a pitch to raise £1.2 million to fund its own growth plans, and the results were staggering. The pitch hit its target in 16 minutes, 12 times faster than the previous world record – and £75,000 per minute! More than 140 investors bought in, with the average amount invested being £8500.
This is an incredible amount in a short space of time and it shows just how much interest and faith there is in crowdfunding. And it followed Crowdcube's announcement of a £3.8 million investment from venture capital firm Balderton Capital.
Crowdcube recently opened an office in Scotland, and we've worked closely with them on a number of projects in the recent past. Their presence here is testament to the potential they see for Scottish businesses and entrepreneurs to get involved.
We are receiving crowdfunding enquiries almost daily, many of which are from recognised and established businesses, and I am confident of being involved in some really exciting and innovative new crowdfunding projects during the course of 2014. A lot of these businesses are also considering more traditional forms of finance but, for various reasons, are choosing to use crowdfunding as a means to fund their business.
The crowdfunding industry has seen significant growth mainly due to technology advances. The "credit crunch" has also influenced the rate of growth with the traditional forms of finance reducing significantly or in some cases disappearing.In addition, the Financial Conduct Authority recently issued a policy statement which has to some extent legitimised crowdfunding by creating more stringent rules. All of these reasons and a whole host of others have helped the growth of the industry.
The evidence all points to crowdfunding now having a recognised place within a wider financing network, and that can only be a good thing.
Paula Skinner is a Partner in the Corporate team at Harper Macleod LLP. She specialises in advising on start-up and investment, advising a wide range of entrepreneurs and high-growth businesses.