Scots firms get less than 1% of UK crowdfunding

Stuart Patrick of Glasgow Chamber of Commerce, which commissioned the report. Picture: Contributed
Stuart Patrick of Glasgow Chamber of Commerce, which commissioned the report. Picture: Contributed
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SCOTTISH firms are missing out on millions of pounds of potential investment from “crowdfunding”, as a report shows that less than 1 per cent of money raised last year in the UK went to recipients north of the Border.

A study commissioned by Glasgow Chamber of Commerce and revealed at an event in the city yesterday indicates that out of £200 million raised across the UK using the social media-inspired method, only about £1m ended up in Scotland. Global crowdfunding uptake hit $2.7 billion (£1.8bn) in 2012.

The report’s author, Tim Wright of research group Twintangibles, said the finding is all the more surprising given the trail blazed by Ellon-based BrewDog, the beer company that is raising £4m with its third equity offering to thousands of fans and small investors.

He said: “BrewDog is a terrific statement of what is possible through crowdfunding, although their approach is by no means typical. It’s surprising given their fantastic example that it has not taken off in Scotland.”

Wright said his research had struggled to find a reason for the relatively low take-up north of the Border. He said that although crowdfunding could only ever be one part of the solution to business funding, it would appear that at least some Scots firms could be reaping its benefits.

“There’s undoubtedly an ongoing need for finance and the type of funding being sought was for things like innovation and expansion are things that have the potential to benefit the Scottish economy,” he said. “The typical funding people were looking for was around £50,000, which is very gettable by crowdfunding.”

Stuart Patrick, chief executive of the Glasgow Chamber of Commerce, became interested in crowdfunding during a visit to the US, when he saw what some American firms had built on the back of it.

He said: “It’s not appropriate for everybody and its got to be done thoughtfully, but having seen the successes that have occurred it would be nuts for us not to look at it.”