Crowdfunding has been hailed by some as the &ldquo;democratisation of finance&rdquo;. To many, it is viewed as a key alternative source of finance where we can all get involved in backing new companies through either donations or the purchase of equity. Unfortunately, it hasn&rsquo;t quite worked out like that.&nbsp; Access article on The Conversation website:&nbsp;https://theconversation.com/crowded-out-how-crowdsourcing-for-startups-turned-into-business-as-usual-5202

Brown, Ross

Mawson, Suzanne

Marine Drugs

English

PubMed

John P. Bowman

Crossref

Bioactive Compound Synthetic Capacity and Ecological Significance of Marine Bacterial Genus Pseudoalteromonas

The genus Pseudoalteromonas is a marine group of bacteria belonging to theclass Gammaproteobacteria that has come to attention in the natural product andmicrobial ecology science fields in the last decade. Pigmented species of the genus havebeen shown to produce an array of low and high molecular weight compounds withantimicrobial, anti-fouling, algicidal and various pharmaceutically-relevant activities.Compounds formed include toxic proteins, polyanionic exopolymers, substitutedphenolic and pyrolle-containing alkaloids, cyclic peptides and a range of bromine-substituted compounds. Ecologically, Pseudoalteromonas appears significant and to datehas been shown to influence biofilm formation in various marine econiches; involved inpredator-like interactions within the microbial loop; influence settlement, germinationand metamorphosis of various invertebrate and algal species; and may also be adopted bymarine flora and fauna as defensive agents. Studies have been so far limited to arelatively small subset of strains compared to the known diversity of the genussuggesting that many more discoveries of novel natural products as well as ecologicalconnections these may have in the marine ecosystem remain to be made

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Stirling Online Research Repository

6/14/2016 Crowded out: how crowdsourcing for startups turned into business as usualhttps://theconversation.com/crowded­out­how­crowdsourcing­for­startups­turned­into­business­as­usual­52029 1/4Crowded out: how crowdsourcing forstartups turned into business as usualDecember 16, 2015 7.16pm GMTRoss BrownLecturer in Entrepreneurship and Small Business, University of St AndrewsSuzanne MawsonLecturer in Entrepreneurship, University of StirlingThe Conversation’s partnersThe Conversation UK receives funding from Hefce, Hefcw, SAGE, SFC, RCUK, The NuffieldFoundation, The Ogden Trust, The Royal Society, The Wellcome Trust, Esmée FairbairnFoundation and The Alliance for Useful Evidence, as well as sixty five university members.View the full listCrowdfunding has been hailed by some as the “democratisation of finance”. To many, it isviewed as a key alternative source of finance where we can all get involved in backing newcompanies through either donations or the purchase of equity. Unfortunately, it hasn’t quiteworked out like that.There are several new financing models that use the umbrella term of crowdfunding, butthey can be fundamentally different. In theory, “equity” crowdfunding lets large numbers ofsmall investors invest in firms via online platforms – or “mini stock markets” for start­ups –regardless of their location. From a business perspective, firms should be able to draw upona wide range of funders in the crowd, who they might never have known existed, to fund,develop and grow their businesses.What we’ve found is that equity crowdfunding isn’t as “new” or “inclusive” as people firstCrowded market. mic wernej, CC BY­NC­ND6/14/2016 Crowded out: how crowdsourcing for startups turned into business as usualhttps://theconversation.com/crowded­out­how­crowdsourcing­for­startups­turned­into­business­as­usual­52029 2/4envisaged.Crowdfunding laboratoryThe UK was one of the first countries to grant regulatory approval to equity crowdfundingand, through various tax incentives, has become something of a unique “laboratory” for thisform of entrepreneurial finance. We have witnessed a massive growth in equitycrowdfunding. It appears to be doubling in size every year, spawning well known platformslike Crowdcube, Seedrs and The Syndicate Room. In the space of three years Crowdcubealone has raised over £100m in capital for over 300 start­ups.During 2015, we undertook the largest in­depth study to date, examining equitycrowdfunding in the UK, interviewing over 60 British start­ups to get their views of why firmsuse equity crowdfunding, how the process works and the benefits it brings to firms.Some of our findings confirmed what is already known – that it is filling the funding gap foryoung start­ups who no longer consider banks as a source of early­stage growth capital.Indeed, many start­ups are attracted to the speed with which they can raise funding and likethe lack of strings attached. There are also important intangible benefits to firms from theprocess, such as firm valuation, product validation and media exposure.Professional gameHowever, some other findings were unexpected. Contrary to the idea that crowdfunding is atransaction between firms and the “crowd”, seamlessly brought together through the internet,we found that deals were often driven by pre­existing networks of investors. Roughly aroundtwo­thirds of the crowdfunding campaigns in our study were “pre­seeded” and backed bybusiness angels (professional investors), with the crowd playing a “supporting role” wheresmall investors are issued B­class shares that have no voting rights attached.These professional investors are investing heavily in businesses that they know of andwhich are often located nearby to them; the crowd then “herd” towards firms who obtain pre­seed funding. So in many cases, equity crowdfunding isn’t really a new or “alternative”source of funding, but rather a repackaging of more traditional start­up funding.As an internet­mediated form of funding, in theory, firms should be able to access equitycrowdfunding irrespective of their geographical location. In reality, however, there seems tobe a large “north­south” divide in terms of successful deals, with around half of all the dealflow emanating from London and the south­east.Cash hunters. Images Money, CC BY6/14/2016 Crowded out: how crowdsourcing for startups turned into business as usualhttps://theconversation.com/crowded­out­how­crowdsourcing­for­startups­turned­into­business­as­usual­52029 3/4There are a number of potential reasons for this. For example, the majority of platforms arelocated in London and we have found that word­of­mouth referrals through businessnetworks are still very important in both identifying and accessing crowdfunding platforms.Many businesses also want to speak to platforms “in person” before committing to acampaign (rather than engaging virtually), and so being within visiting distance of a platformis important. So despite the internet­mediated nature of crowdfunding, where distanceshould be irrelevant, it is strongly concentrated in the London and the south­east ecosystem.We are currently exploring this trend further.Tip of the IcebergFew non­professional investors have the knowledge to undertake their own due diligenceon firms before they invest nor do they offer firms any additional value (for example throughadvice or support) on top of their financial contribution. Indeed, some start­ups have referredto the crowd as “dumb money”. Observers have also questioned the highly inflatedvaluations of some of the firms funded through equity crowdfunding, many of which areinternet­based firms linked to the so­called “sharing economy”, and operating in consumer­oriented markets with no intellectual property or recoverable assets.Given the high failure rate of new start­ups generally, and the nature of most crowdfundedbusinesses, few non­professional investors are likely to see a return on their investment anytime soon.Despite these reservations, given the current growth trajectory of equity crowdfunding, whatwe’ve seen so far may just the tip of the iceberg. However, icebergs can sink ships. Whileproviding an important source of start­up funding, equity crowdfunding raises a number ofthorny issues in terms of investor returns, investor protection, sustainability and the need forproper regulatory safeguards.Crowdfunding has been heavily promoted by organisations such as NESTA, but the way itactually works is strangely familiar. We thus advocate a more critically informed discussionabout equity crowdfunding, especially given the UK’s heavily deregulated and proactivefiscal policy environment for this emerging source of entrepreneurial finance.UKFinanceInvestmentBritainInnovationCrowdfundingstocksStartups Tweet84 Share14London. Taking the lion’s share. Steve Evans, CC BY­NC6/14/2016 Crowded out: how crowdsourcing for startups turned into business as usualhttps://theconversation.com/crowded­out­how­crowdsourcing­for­startups­turned­into­business­as­usual­52029 4/4 Get newsletter