Would you help pay for a book to be published that features tales from mums caring for children with life-limiting conditions? This is one of thousands of crowdfunding projects seeking funds. Lives
The phenomenon of crowdfunding is booming. You can stake from just pounds 10 to emulate the likes of
But as this craze gains momentum, what are the risks? A wide range of websites have sprung up bringing investors together with projects seeking a cash injection.
The Crowdfunding Centre said more than pounds 3,500 per hour is being raised in the
In return for your investment you may be offered a tangible "reward", such as tickets to a gig or a T-shirt, an equity stake in the business - or even a share in a buy-to-let.
Typically, crowdfunding websites benefit by taking a percentage commission of money raised, at an average of 5%, alongside - sometimes - a slice of returns paid to investors. So check the fine print.
The House Crowd says its participants can put from pounds 1,000 down on a buy-to-let property to receive a guaranteed 6% net return per year plus a share of profits on sale. Alternatively, they can opt for a fixed return of 7.5% net a year with no equity in the property. A typical property currently listed is a two-bedroom terrace house in Moston,
Experts warn that investors should check crowdfunding site credentials carefully. Property expert
"I fear that we are going to find a significant number of hooky sites that will promise you the world, take your money and leave you feeling very stupid."
The majority of the sites offer warnings stating that investors risk losing their cash if new ventures fail, typically via an online questionnaire. However, some check enterprises more extensively than others.
Since April, the sector has been regulated by the
Here we look at some of the projects on offer.
Music, art and films
Kickstarter, which originated in the US, offers a massive range of reward-based projects. It opened its doors to British investors in
The Observer found a staggering 3,381 projects seeking funding, ranging from mobile phone apps and circus performances, to an "eco" magazine for kids. It lists the percentage of the total amount sought that has been pledged so far, and how many days there are left to invest.
A project has to reach its goal before the deadline, or no money changes hands, and less than 50% make it. The minimum pledge is usually pounds 1 or
Among those projects listed as successfully funded is a truck offering "Good & Proper" tea to Londoners. This asked for pounds 10 or more in return for a bag of tea, to free hire of the van for a party or wedding if you could stretch to pounds 1,000. It sought a total of pounds 10,000, and successfully raised pounds 14,682.
Among the sites that target green-energy are
"Buying an equity stake in an early stage start-up is considered more risky than lending against an operational wind project, for example, because, with the latter, there is historical performance and revenue data. The amount of energy - and therefore revenue - that solar panels and wind turbines generate is relatively predictable, which means funders have a sensible idea of what their returns will be."
Abundance has crowdfunded pounds 6m of projects so far, with a mix of wind and solar energy in the
For example, Engynious Schools is seeking pounds 1m to share ownership and returns with private investors from solar panels it owns on 19 schools across the
There is a large range of sites.InvestingZone was launched in
SyndicateRoom, another newer entrant, offers users the chance to "top up" large stakes in a business that have been bought by established investors.
Seedrs and Crowdcube are among the well-established, both offering a minimum investment of pounds 10. Seedrs rasies an average of pounds 1m each month for start-ups that are struggling to get off the ground, and says it is up to the investor whether they are happy to take the risk on a business they hope will succeed.
Some high-profile figures are joining the crowdfunding throng. Fund manager
Among other sites, Peoplefund.it
and Crowdfunder feature creative enterprises seeking backing in return for rewards. On Indiegogo, you can put money towards political campaigns, humanitarian projects and technology start-ups. Buzzbnk and CrowdBnk also include a variety of projects, from charities to many other businesses.
Some sites are more niche. For example, unbound is a crowdfunding website and a publisher, while MoolaHoop exclusively lists business ventures from female entrepreneurs.
Don't be fooled by the glum face, Mr Toad of Wind in the Willows fame is benefiting from the new crowdfunding boom. Rex Features
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