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Crowdfunding is the process of many people investing small amounts of money into a company or project that is seeking funds. This is usually done online through a platform like Crowd for Angels. Investors can invest as little as £25 and as much as £100,000+ in companies seeking funds.
On Crowd for Angels, companies can raise funds through shares, bonds or tokens (digitalised assets). Investors make tax-efficient share investments using SEIS/EIS tax relief and in Bonds through the use of the tax-free IF-ISA tax wrapper.
The crowdfunding industry itself is not a new concept. As far back as 1606 the Dutch East India Company used the power of the crowd in order to fund the lucrative venture of conducting trade between Europe and Asia. Crowdfunding has boomed in recent years driven by a lack of finance for small enterprises caused by the 2008/09 financial crisis, and the explosion in usage and reach of the Internet.
Crowd for Angels does not charge investors any fees and opening an account is free and easy.
Companies create a pitch on the Crowd for Angels platform by showcasing their business and setting out the reasons they are seeking the investment. As a part of this process, companies must decide on a 'minimum' and a 'maximum' funding target they are looking to raise. Furthermore, companies must specify the valuation and therefore the price of the shares they are offering in an equity offering or the interest rate they are willing to offer investors on a bond issue.
Companies are given 60 days to complete the raising of funds. If they are not successful, any committed funds collected will be returned to the investors' accounts on the Crowd for Angels platform. If a company is successful in reaching its funding target Crowd for Angels will request its lawyers to prepare the Subscription Agreement between the Company and Nominee acting for the investors so that the investment can take place.