Many ideas fail before reaching the market due to lack of funding or slow sales, according to a recent report by EY Malta on behalf of the Malta Business Bureau on access to finance.
These obstacles, however, are being removed as crowdfunding is changing the landscape of investing for early-stage companies and products.
Crowdfunding is a collaborative funding via the internet. There are mainly two types of funding – donation-based and investment funding.
Donation-based crowdfunding kicked off less than a decade ago – where early products and services would search for groups of people who believed in them to donate capital to get an idea off the ground. It serves the validation for the idea and pre-sales of the future product, which many traditional investors ask for. Early companies set up their campaign explaining in compelling ways, why people should donate small amounts of money in exchange for a perk.
A local success story was by Maltese start-up MightyBox Games, a game development studio at the University of Malta’s Takeoff Incubator, which raised more than €313,141 on Kickstarter.
The bureau and University have launched a crowdfunding platform to fill the gap in funding local start-ups and entrepreneurs
Soon Malta will have its very own donation-based/reward crowdfunding platform. The Malta Business Bureau and University have launched a crowdfunding platform to fill the gap in funding local start-ups and entrepreneurs. University rector Juanito Camilleri said: “Crowdfunding will surely boost innovation and entrepreneurship, particularly if the local as well as international community are encouraged to participate actively.”
The investment crowdfunding is a similar concept to donation, but instead of products/services it involves selling company equity in exchange for the required capital.
EY, in collaboration with Takeoff, is holding an event with keynote speaker Jeff Lynn, CEO of Seedrs, the equity crowdfunding platform, on Monday at the Chamber of Commerce in Valletta from 4pm. Mr Lynn will discuss why equity crowdfunding has become such a popular form of finance for entrepreneurial businesses, what types of businesses it is best for and how to succeed with an equity crowdfunding campaign.
Attendance to the event is free. To register e-mail Jennifer.Tonna@mt.ey.com or visit www.meetup.com/Malta-Startup-Community/events/224041586.