What is crowdfunding?
Posted by hrtechpartnership on April 8th, 2019
Crowdfunding can be described as the social media version of fundraising. It is a means for ordinary individuals (not high net worth) to finance start-ups using a very small sum of money (as low as £ 10), usually through an online platform. Behind the acceleration of Crowdfunding is the emergence of technology and a huge increase in communication channels. It has, therefore, become relatively easy to reach out to friends, family and other like minded people and spread the word about a certain business, easily and effectively. At an individual level, it is a micro funding approach which comes together to generate some serious cash and capital for a business. The principle of Crowdfunding has been there for ages in various forms. In 1700s and 1800s Crowdfunding existed among the low income families in Ireland. In times of war, like the World War 2, governments have issued debt securities called War Bonds to finance the cost of the war. This was another variation of Crowdfunding. Traditional micro-financing while a form of crowdfunding has been a late phenomenon. It came to shape in some South Asian economies in 1970s and then grew in size and scale.
In its most recent avatar Crowdfunding provides several advantages for entrepreneurs. The first is the swift and direct access to tangible capital. Additionally, these start-ups – can get early proof of validation, seek and win early adopters and possible advocates, obtain vital market feedback for self improvement and gain broader market or even media exposure which otherwise would have been difficult and expensive.
Crowdfunding also comes with its own set of challenges and risks. The core idea driving a start-up is its most valuable intellectual property (IP) and by exposing it a Crowdfunding approach risks idea theft. During the campaign period, Crowdfunding is an additional overhead to the time and energy of a start-up and needs to be managed well so that donor exhaustion does not creep in. Startups also cannot afford to fail in Crowdfunding as it may give the impression that its founding idea is not viable and sale worthy.
The HR TECH Partnership offers a crowdfunding opportunity to start-ups they invest in through their core fund. As the lead investor, they have ‘put the money where their mouth is’ and reduce the risk for the Crowdfunding investor. The key purpose is to further build on its philosophy of bringing in domain experts as investors by reaching out to a wider pool of human capital professionals. Through this process, the investee company gets wide visibility to a large pool of HR professionals who are not just investors but future customers and potential mentors.
The London based HR Tech Partnership is an investment venture in the People Tech space with most of its stakeholders being senior corporate directors.The company is an early stage investor and focuses on startups which leverage data and analytics to help organizations around Talent and Workplace productivity. To know more about how the HR TECH Partnership works visit http://www.hrtechpartnership.com/
