Another Look at Crowd Funding

Roger Tipple at Sheffield Inventors' Group 7 Oct 2013

The speaker at Sheffield Inventors Group on 7 Oct 2013 was Roger Tipple of Tipple Associates. Roger is Sheffield Central Library's innovator in residence and the title of his talk was "Getting your Product to Market". One of the topics he discussed was funding and one of his suggestions for raising seed capital was crowd funding.

Crowd funding is appealing for funds from the public over the Internet.  As it has become harder to raise investment or borrow from conventional investors and lenders and indeed harder for investors to invest and lenders to lend a new type of financial institution has evolved that puts entrepreneurs and investors and lenders in touch with each other.  One of those institutions is Bloom VC which I discussed in "Crowd Funding: No Waffle" on 12 May 2011.  Since I wrote that article Bloom claims in its "About" page to have raised a total of £269,000 for such businesses as "Bonnie Bling" (a bespoke jewellery company) and "The Ecosse Candle Company" (which makes candles).

Nesta (the National Endowment for Science Technology and the Arts) has published "An Introduction to Crowdfunding" and "Working the Crowd, a short guide to crowdfunding and how it can work for you". It has also set up a website called CrowdingIn at http://www.crowdingin.com which has a searchable database of crowdfunding institutions or platforms in the UK.

There are a number of obvious legal difficulties with crowdfunding such as s.755 of the Companies Act 2006 which prohibits private companies offering securities to the public and s.19 of the Financial Services and Markets Act 2000 which requires most financial services to be regulated by the Financial Conduct Authority ("FCA"). In its note on Crowdfunding of 4 June 2013 the FCA expressed the view that:

"most crowdfunding should be targeted at sophisticated investors who know how to value a startup business, understand the risks involved and that investors could lose all of their money."

It warned that

"investors in a crowdfund have little or no protection if the business or project fails, and that they will probably lose all their investment if it does."

The FCA also expressed concern that

"some firms involved in crowdfunding may be handling client money without our permission or authorisation, and therefore may not have adequate protection in place for investors."

However, some crowdfunding platforms have sought and been granted such authorization from the FCA, The Business Secretary appears to be encouraging crowdfunding (see Michael McDowell "CBI and Vince Cable encourage businesses to look to crowdfunding" 22 May 2013 The MoneyLab Blog). Finally there is now a UK Crowd Funding Association.

As always, send me a message through my contact form or call me on 020 7404 5252 during normal office hours if you want to discuss this article. You can also tweet me, write on my wall or send me a message through G+, Linkedin or Xing.

Playback Rewards: fancy getting paid to watch telly!

Quite literally, Playback Holdings Ltd pays viewers in cash or vouchers for watching TV commercials. As the company's website explains:

"Targeted advertising is the holy grail of the TV and advertising industries. In the US, experts forecast that by 2015 the annual revenues from targeted advertising will exceed $11 billion. But in the UK and Europe it has stalled because subscription-based services and internet-based advertising sales houses know so much about their customers that it would be difficult to avoid claims of abuse of privacy and data protection rights if they targeted them with tailored advertisements. PBR’s technology completely avoids all privacy and data protection issues."

The technology to which the home page refers are inventions that identify each viewer's interests but does not disclose his identity to the company or any other person. The inventor is my very good friend Alistair Kelman  who is chief executive officer of Playback Holdings. Other heavyweights behind the project include David Elstein, former SEO of Channel 5 who will be the company's chair, patent agent Vivien Irish, and, as you can see from the above video, Stephen Fry, who has invested in Playback Holdings.

In the video below Alistair and David explain how the company's business model works:

  Playback Holdings is raising funds for further development by crowd funding,    You can find more information about the company's offer by joining Seedrs - the first British seed funder to obtain FSA authorization.

The project has already attracted a lot of interest in the blogosphere. Neil Infield, manager of the Business & IP Centre of the British Library, has called Playback Rewards a success story in the making.   Here are some of Alistair's posts on the Cisco British Innovation Gateway Awards blog.

For further information, call me on on 0800 862 0055 or contact me through my contact form, Facebook, Linkedin, Xing or twitter.