What is crowd funding?
You might of seen this word being bandied around recently; it’s one of the ways that some film makers are getting the budget to fund their productions, particularly popular with indie and slightly unusual or specialist subjects. Essentially it means sourcing from a crowd rather than one or two institutions and it is making some impact on our traditional funding routes. In the UK the usual route for funds is through the banking market, but of course financial institutions have become more and more wary of loaning to any business, not just those in the film business; you’ll need bullet proof credentials to get any serious money from the banks these days – seems they always want to offer money to those who don’t need it, yet when it is needed they suddenly aren’t interested. Anyway, crowd funding, or one form of crowd funding is on a more peer to peer level where individuals are investing in some which has been vetted and in which they have an interest, but without the middlemen and of course some of the complexity and costs that are usually incurred.
The lending takes place on line, and borrows outline their load bid then investors, individuals that is, can choose to offer sums of money, from as little as £10 even, for a stake in the project. The investors choose the level of risk and investment, and can also determine the return they feel they need.
Those looking for funding in this way do need to have a good credit history, so it’s not for start ups, but it’s not just for peanuts either; once small business we’ve come across managed to borrow more than £160 million this way. The main operators of this sort of funding are RateSetter, Funding circle and Zopa – so maybe if you need to raise money for a worthwhile production crowd funding could be worth a look.