Collectively, the team at Shadow Foundr has raised in excess of £80m in equity funding, from their networks of business angels and investors over a period of 6 years. We understand Crowdfunding is an exciting concept but we also understand the importance of putting the investors’ interests and compliance at the core of the activity.
Extensive due diligence is carried out by the team; valuations and entrepreneurs are questioned in depth; and the validity of opportunities is scrutinised, before we seek firm commitments to fund a significant proportion of a target fund-raise amount, by our existing investor network.
Once these commitments are in place, our platform allows every-day investors to invest directly into these pre-vetted, early-stage companies and Small to Medium Sized Enterprises (SME’s).
Shadow Foundr's ability to call on an established network of business angels and other professional investors, including family offices, venture capital and other authorised financial institutions, to commit to an opportunity before it is presented on the platform, should provide comfort for crowd investors.
Crowdfunding is the buzz word in Alternative Finance. The term describes the process of pooling cash together from many individuals (the crowd), to help fund start-up businesses and innovative ideas. There are three basic areas within the crowdfunding sector – Rewards Based Crowdfunding; Equity Crowdfunding; and Peer to Peer Lending (P2P).
Rewards Based Crowdfunding – This is where people give funds to a business or idea, in exchange for goods or services. The crowd funds the opportunity, so that it can move forward and in return for their funds, the crowd is promised goods or services as opposed to shares in the business and any potential financial reward.
Equity Crowdfunding – This is where the crowd become equity investors and they actually purchase shares in the business. As shareholders in the business, the investors will share in any upside should the business succeed. It is important to note however that if the business fails, then the investors stand to lose all of their investment. This is the reason the Government has implemented SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme), as both of these schemes offer excellent incentives to equity investors and also help mitigate some of the risks associated with equity crowdfunding.
Peer to Peer Lending (P2P) – This is where individual investors lend cash usually on a platform, to businesses that have been pre-vetted by that platform and have provided a form of security. The returns are generally higher than those of a traditional financial institution, but much lower than the potential returns from equity crowdfunding. This is reflected by a much lower risk than equity crowdfunding, thanks to the security put up by the business.
Crowdfunding is a great method of bringing much needed funds to innovative ideas and allowing everyday investors to take part in the early funding rounds of companies that were previously only accessible to venture capitalists and large institutions.