Whenever I explain who the companies are that are going to be listing on ShareIn at launch, everyone gets interested. Very interested. And I do mean everyone – and not simply people who admit to being interested in finance. It’s because the companies have truly incredible plans for the future and even my least business minded of friends think “wow – they sound amazing”.
So ShareIn have found some really amazing companies that plan to change the world but how do we get the message out about them?
It seems that the US has an advantage here in many ways. Public knowledge of crowdfunding is more advanced, partly because, as a result of a number of high-profile campaigns, the general public is generally aware of the success of Kickstarter – for example, in 2012, 2.2 million people pledged around $320 million, funding 18,109 projects. But the level of UK awareness is very low, even amongst finance professionals, many of whom remain unclear about the different types of crowdfunding that exist.
It seems to me that there are three key messages that we need to focus on when it comes to equity crowdfunding.
We need to explain clearly how your investments will be used by some truly amazing companies who have set their sights on changing the world for the better. In ShareIn’s case, that includes businesses that plan to save lives by combating malaria & dengue fever, save the planet by measuring the impact of deforestation and to help surgeons plan surgery more effectively with 3D hologram technology.
People need to understand just how good the tax breaks are for investors. OK – tax is never the most exciting of subjects. But we’re not talking about some kind of simple gift aid relief that companies claim after you’ve invested.
Sorry to harp on about this but by investing in companies that are SEIS eligible, you can claim back 50% of your investment against your income. So by investing £500, you can claim back £250 from HMRC. If your chosen company fails (remember these early-stage investments are risky), you can offset the remaining 50% against your income tax in the year you make that loss. But if the company succeeds and you hold the shares for 3 years, you never pay capital gains tax or inheritance tax.
What’s not to like?!
Lastly, the bigger picture. Crowdfunding is a critical part of the story that is developing around the democratisation of finance. What does that mean? Take a quick look at this 5 minute talk by Bruce Davis, MD of Abundance Generation:-
Bruce has an interesting background as an anthropologist who was involved in the development of Zopa, which is now the UK’s largest peer-to-peer lending service, matching sensible individuals who are looking to borrow money with those who are looking for interest on their savings.
As individual economic entities, Bruce points out that we get the markets that we deserve. We’re all aware that the existing financial system is inefficient and weighted heavily in favour of the banking sector. But now it’s up to us all to fight for the democratisation of finance. In practice, that involves using your vote as an individual to take back control of your own money – in effect, choosing to move your money to the places where you can enjoy the greatest reward and control.
For many in traditional finance, this development of choice represents a new intellectual revolution. The internet continues to presenting an increasing number of alternatives, each of which promises more control for the individual.
We’re in the midst of a cultural and societal change in funding that is only accelerating. The great thing for individuals is that the result is overwhelmingly positive. The barriers for those with the funds to invest are being dismantled and the added benefit when you consider equity crowdfunding is that by taking part, your actions do not simply have a single benefit of generating greater personal wealth when your investee companies succeed.
That’s because, regardless of whether those businesses survive and prosper or sink beneath the waves and leave you with the not-inconsiderable tax benefits instead, you’re helping to drive the innovation that is essential to drive prosperity for a much wider section of society.
I hope you’ll join us when we launch in October. Sign up by registering on the site and we’ll keep you up to date as the big day approaches.