Banking

Forget banking: Brits are racing to crowdfunding

By Oliver Smith 14 June 2016
Hiyacar's Rob Larmour and Graeme Risby raised over £160,000 via crowdfunding this year.
The short of it

Crowdfunding has doubled in popularity.

Investors take note. 

In the first three months of 2016 crowdfunding sites saw a whopping 27m visits from Brits looking to move their money into more unusual investments.

From crowdfunding projects like the Science Museum’s Kickstarter to rebuild Eric, Britain’s first robot, to equity investments in businesses like Hiyacar on Seedrs.

Read more: The Science Museum is rebuilding Eric – Britain’s first robot

According to research group Hitwise – a division of Connexity, which monitors the internet habits of some 3m people – the number of Brits seeking out these sort of crowdfunding opportunities has doubled over the last three years to an all-time high.

Just last year Crowdcube boasted that over £118m was invested into businesses via its platform, another all-time record.

And while we don’t know how many of these visits to crowdfunding sites in 2016 actually led to money being invested, we bet a fair amount did.

Read more: Sitting down with Seedrs’ Jeff Lynn, the crowdfunding king

Jeff Lynn, co-founder and CEO of Seedrs.

Young Kickstarters

But not all crowdfunding is the same.

Younger Brits (18 to 34-year-olds) are 34% more likely to support projects on Kickstarter. They’re investing in ideas that they feel passionately about, and are less worried about actually making any money.

It makes sense, according to Hitwise this “reflects the cultural values of millennials, who are willing to fund the projects they believe in”.

Mature investors look for returns

On the other hand older internet users (aged 35+) are far more focused on getting a good return.

This older group is more likely to visit Funding Circle (186% more likely than millennials), Zopa (93% more likely), Crowdcube (45%) and Seedrs (34%), as these are services that you can make a decent return from, despite being more risky.

Read more: The good, the bad, and the ugly side of crowdfunding

Hitwise says these figures show that older internet users are surprisingly open to avoiding traditional banks in favour of these kinds of unusual online investments.

That’s not surprising as the interest rates on most saving accounts remains painfully low.

And with the sheer number of people Googling ‘crowdfunding’ and looking to put their money elsewhere, the future looks bright for the fledgling sector.