Trampoline Systems, the award-winning enterprise software vendor, has pioneered an unconventional approach to finance its growth. Instead of raising money from venture capital firms Trampoline is using a technique called “crowdfunding”, raising smaller stakes from a community of smart private investors.
Trampoline has published this website to explain how crowdfunding works, why Trampoline chose this route and what entrepreneurs need to think about if they’re considering this path for their business.
The crisis in venture capital
The global venture capital industry is currently in the most severe crisis of its history. According to Dow Jones VentureSource total investment fell by 36% in 2009. Outside the USA the picture is even bleaker with a fall of 51%. A consensus is emerging that this is a structural change, not just a cyclic phenomenon. A June 2009 report by the Kaufmann Foundation predicted that total assets under management by venture capital firms will contract by 50% from $24 billion to $12 billion over the next few years.
At the same time as the overall sums are shrinking, the pattern of investment is also changing. Funds have increased allocations to existing portfolio companies and focused new investments on lower-risk segments of the market. On the one hand funds are making small bets on seed-stage ventures. On the other hand they are making big investments in late-stage businesses that are either profitable or close to profitability. According to research by Deloitte:
“We’re seeing reduced investment levels as firms either invest smaller sums in very early-stage companies, or invest traditional sums in fewer and much later-stage companies. The middle ground has been largely vacated.
These changes are opening up a chasm in the £500,000 to £2 million financing range. Innovation is urgently needed to provide entrepreneurs with alternative ways to raise sums in this range. Trampoline believes crowdfunding is the best solution to bridge this funding gap and will become an established technique in the venture landscape.
Crowdfunding in a nutshell
Crowdfunding is an alternative approach to raising finance. It’s evolved over the last decade, first in the film and music industries, then in journalism and now in venture finance. Unlike traditional models which rely on large commitments from one or two institutions crowdfunding is based on raising smaller sums from lots of people, who may be linked by social networks or shared interests.
- Crowdfunding presentation at British Library
- Crowdfunding presentation at Minibar
- First tranche of crowdfunding investment completed
- Trampoline featured in Growth Business article on the VC crisis
- Charles Armstrong interviewed for Out-Law podcast
- Techcrunch article on Trampoline crowdfunding
- Sunday Telegraph feature on Trampoline Crowdfunding
- Financial Times on Trampoline & alternative finance
- Financial Times feature on Trampoline's Crowdfunding
Trampoline Systems is an award-winning enterprise software vendor based in London (UK). The company’s SONAR CRM product helps customers increase the win rate in B2B sales.
Trampoline’s crowdfunding process
In 2009 Trampoline became the world’s first technology business to raise finance through equity crowdfunding. The company announced a programme to raise a total of £1 million spread over four rounds. The first round of £260,000 was completed in October 2009 and a second round of £350,000 opened in August 2010.
Trampoline has worked closely with legal advisors to ensure its crowdfunding process complies with Financial Services Authority (FSA) regulations. The company is only inviting expressions of interest from people certified as high net worth individuals or as sophisticated investors, plus Trampoline’s existing shareholders.
If you are covered by one of these categories you may be interested in accessing details of Trampoline’s crowdfunding process.
We apologise that we’re not able to provide details of Trampoline’s crowdfunding process to anyone who’s not covered by one of these categories.