As Scotland’s leading legal advisers on equity crowdfunding, we are delighted to have been a sponsor of The Scottish Crowdfunding Report 2016 and to announce its release today, launched by the Glasgow Chamber of Commerce alongside fellow sponsors Lending Crowd and Santander.
Remarkable growth of crowdfunding in Scotland
The report, which is a follow up from the Crowdfunding - The Scottish Perspective published in 2013, is a review of crowdfunding and alternative finance in Scotland since the 2013 report. This period was one of significant growth in relation to alternative finance generally and also in relation to the variety of alternative finance options available. Not only this, we have also seen the emergence of Scottish based platforms.
Earlier this year we saw the release of the NESTA 2015 Alternative Finance report which focussed on the UK generally. This report presented us with some interesting statistics and showed how alternative finance in the UK is continuing to grow as a popular way of financing for businesses.
As one would expect, Scotland has sat behind the curve in terms of the numbers associated with crowdfunding in comparison with the rest of the UK. One of the main reasons for this is that the England statistics are driven by London where a significant proportion of crowdfunding deals take place. However, one of the most interesting points to take from this is that in Scotland the success rate for crowdfunding campaigns is 31% in comparison with the UK average of 23%. In fact, Edinburgh based projects have a success rate of 43% which is significantly higher than the UK. The measure of awareness of crowdfunding, as a source of finance within the business community in Scotland does seem to have increased too, particularly in relation to the different sources of crowdfunding available.
The amount of funding raised through crowdfunding in Scotland between October 2014 and September 2015 was over £27 million from 1263 successful projects. Although this is still only 4% of the UK total raised, this same statistic in 2012 was only 1% therefore we are seeing an increase in use of crowdfunding in Scotland, albeit at a slower rate.
The rise of crowdlending
One of the other changes to note is that over £20 million of the funding raised came from the crowdlending sector which was certainly not as prominent a source of funding in the 2013 report. The dominance of the crowdlending sector is in line with the rest of the UK and this source of funding in particular looks set to continue to be a major source of funding for SME businesses.
Although Scotland is home to one of the most high profile crowdfunding campaigns to date, Brewdog, it seems as though there is still a level of scepticism in using this method of funding.
In terms of our own figures, Harper Macleod completed 36% of the equity crowdfunding deals reported in Scotland in 2015 which shows that we are key players in this industry. We have seen a year on year increase in the number of crowdfunding deals taking place since 2012.
We still expect to see these numbers rise in 2016, especially when looking at peer to peer lending when we consider the introduction of the innovative finance ISA, launched on 6 April 2016.
Read the report
You can read the full Scottish Crowdfunding Report 2016 here.
Get in touch
To find out more about how we can assist you in relation to equity crowdfunding or crowdlending, please get in touch with a member of our team.