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Sunday Telegraph feature on Trampoline Crowdfunding

Today’s Sunday Telegraph includes a feature on Trampoline’s Crowdfunding initiative written by the paper’s Enterprise Editor, Richard Tyler. The article discusses how conventional venture capital financing can lead businesses to raise progressively larger sums of money regardless of whether that’s what they actually need. As Trampoline proceeds down the crowdfunding path it will be interesting to see if there are other areas of strategy where we begin to innovate having previously followed the norms of the venture capital industry.

Financial Times on Trampoline & alternative finance

Hot on the heels of last Wednesday’s feature, today’s Financial Times includes an article discussing Trampoline’s crowdfunding initiative as an example of alternative sources of finance being sought by SMEs.

Financial Times feature on Trampoline’s Crowdfunding

Today the FT wrote an excellent two-column feature discussing Trampoline’s decision to raise finance through crowdfunding. The article quotes the experience of Sellaband using crowdfunding in the music industry and the vital role played by personal networks. The paper even included the photo Al took yesterday in front of the Bishopsgate tower. The article text is available online and here’s the picture.

Charles Armstrong launches Trampoline's crowdfunding initiative in London

Crowdfunding Trampoline

Today we’ve announced that Trampoline is financing the next stage of its growth through an innovative process called crowdfunding instead of traditional venture capital. We’re raising £1 million from up to 100 private investors with a minimum stake of £10,000. In the last few years crowdfunding has established itself as an alternative model in the music and film industry, enabling artists to finance production and releases without signing to a label or studio. This is the first time the technique has been used by a technology venture of Trampoline’s scale.

There are several reasons Trampoline decided to take this step. First and foremost, the financial crisis has severely restricted the availability of conventional finance for businesses at Trampoline’s stage of growth. To maintain the company’s momentum we needed to find a different route. Secondly, we think entrepreneurs should have more choices about how they finance their businesses. We wanted to prove that the internet makes new alternatives available which can function at a reasonably large scale. Thirdly, innovation is a core part of Trampoline’s DNA. We’re always looking for new solutions that are more efficient than the conventional ways of doing things. We’ve spent the last month working with our advisors and shareholders designing the process and ensuring it fits with FSA (Financial Services Authority) regulations. Today we opened the doors.

Some of the greatest changes the internet has brought have involved mobilising large communities of people in new ways, whether that’s Wikipedia, Facebook or Ebay. Crowdfunding is the equivalent for the corporate finance world. Crowdfunding isn’t going to replace venture capital, private equity, debt finance or stock-markets. These traditional models will continue to provide the most efficient solution for certain financing needs. But I think crowdfunding could establish itself as the best solution for many early and mid-stage ventures. In many ways it’s an evolution of “friends and family” and “angel” models, just operating with greater transparency and on a larger scale. Crowdfunding grows organically from peer to peer networks of trust, experience and influence that can help a venture to secure the resources it requires and achieve success.

I hope the the initiative Trampoline’s announced today will spark a discussion in the start-up and venture finance worlds. I’d love to hear what you think. We invite you to add your comments on our discussion page.

Ready to roll

We’ve finished the final set of revisions to our crowdfunding process following the last comments from shareholders and legal advisors. At this point it looks like we’re ready to kick off the whole adventure tomorrow.

One of the world’s top business newspapers has told us they’re running a feature on Trampoline’s crowdfunding process in tomorrow’s edition which is massively exciting. This afternoon they asked us for photos so we had a mad rush to prepare some before their deadline. We made a placard saying “The Crowd is Nigh” and went down into the city where Al snapped me holding it with skyscrapers in the background. But I don’t think the paper liked it very much as they asked us to send something different. Oh well.

It’s been a lot of work getting to this point but now the preparations are complete. None of us can predict exactly what’s going to happen from here on. There’s the same mixture of excitement, anticipation and nerves you feel when you’re about to step out onto a big brightly-lit stage and perform something for the first time.

The journey starts here

It’s half past six on a Friday evening, the rain’s pelting down outside the Trampery and Last.fm is playing me Italian music from the 1930s. Two hours ago we went live with this website, explaining how crowdfunding works and why Trampoline’s chosen this route instead of raising money from venture capital firms.

This is just a “soft launch” so Trampoline’s existing shareholders can look at the site. It’s not linked from anywhere else and we haven’t started promoting it. Nonetheless this marks the beginning of the process we’ve been preparing for several weeks and it’s an exciting moment.

Next week the adventure really starts.

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About

Crowdfunding

Crowdfunding is an alternative approach to raising finance. It’s been developed over the last decade, principally in the film and music industries. Unlike traditional models which rely on large contributions one or two institutions crowdfunding is based on raising small sums from many number of people, who are typically linked by social networks or shared interests.

Find out more about Crowdfunding

Trampoline Systems

Trampoline Systems is an award-winning software business based in London (UK). The company is attracting attention from around the world for its SONAR social analytic technology and its vision of how corporations must evolve.