Can’t Wait To Crowdfund Your Startup? Try London Startup: Up And Funding

Crowdfunding is all the rage these days. Kickstarter seems to be one of the quickest way to get a tangible product startup, movie, or book off the ground. The downside to Kickstarter is that you can’t invest in businesses and startups.

The JOBSAct was passed earlier this year and the SEC is currently working on the rules and regulations that will apply to those crowdfunding their startups. Until the JOBSAct, to legitimately invest in a startup as an accredited investor you typically had to have a net worth of over $1 million dollars excluding your residence. This made it tough for those that wanted to invest in startups but didn’t monetarily qualify from an accreditation standpoint.

There’s no doubt that crowdfunding for startups will be hot but truthfully it probably won’t officially roll out until the spring of 2013, regardless of what others are saying.

If you’re jonesing to get started with crowdfunding your startup, you could incorporate across the pond and then use UpandFunding which is a UK based crowdfunding site that’s starting to pick up some serious traction.

UpandFunding isn’t just about startups though, you can also invest in established businesses and establishes businesses can go to upandfunding.com to raise capital at anytime for any need. UpandFunding, because they are based in the UK, can already allow small, crowdfunded investments for actual equity.

We got a chance to talk to UpandFunding in the interview below:

What is Up And Funding?
Up and Funding is an online equity crowdfunding platform. A way for everyone to invest in startup and established businesses as well as giving businesses a new way to raise finance through the crowd.

In layman’s terms, how does it work?

Basically an entrepreneur lists a profile of their company on our platform. This would consist of information about the business, the market they seek to get involved with as well as some financial information/projections etc. Obviously included would be how much they are looking to raise and for how much equity they are willing to give up. We help them write their profiles to make them the most appealing to any potential backer. After they are listed, anyone can invest anything from £10 to the full amount that they are asking for. If they receive the level of funding, we close the pitch, issue the shares to the investors and the money

Who are the founders and what are their backgrounds?

It’s a small team of four. There is me, who is basically the face of the business, engaging the entrepreneurs and potential investors as well as doing most of the marketing. It’s a tough ask… I had a financial services background for a short while raising capital for investments such as hedge funds.

Chris Donnelly is in charge of managing the development on the technical side. He previously worked as a property broker before his love of all things social media lead him to work in that field.

Matthew Wright is the designer behind the website, logo as well as maintaining the brand’s identity (also he came up with the name which I hate to admit!)

Warren Moore is our coder and site developer as well as all round expert in just about everything. He says that anything online he can code. Anything.

Where are you based?

South West London, next to Hampton Court Palace. It’s a little further out than most of the tech startups, but we love our surroundings!

What’s the startup scene/culture like where you’re based?
London generally always seems to have a slight chip on its shoulder for not being Silicon Valley but it seems to be growing all the time. You hear about a new startup every day, and is almost certainly the startup capital of Europe. It has also entered the national mindset from a more holistic point of view, where working for a startup is considered a legitimate alternative for a corporate job. I think it’s only a matter of time before some of London’s startups become as successful as their Californian counterparts!
How did you come up with the idea for Up And Funding?
Amongst our group people were always voicing their frustration about Angel Investors. There would be people making journeys across the country with no guarantee of anything more than a passing interest. Also there was a lot of cases being led on by investors and then the process to fail at the last hurdle. This has the double effect of not only being incredibly frustrating, but it also costs startups other potential investors that may be interested.
The idea was to streamline this Angel Investment process online, rather than simply be another one of the Angel directories, but this really only solves half the problem with finance. Exciting investments are all too often just reserved just for high net worth individuals and traditional investments that are open to everyone have seriously underperformed. I think that the Facebook IPO sums it up. As a private company any investment yielded great returns but as soon as the general public were able to invest they would have done well to stay well away! So bringing the crowdfunding aspect to this really opens up investments in businesses when they still have real value.
What sets Up & Funding apart from other crowdfunding models?
Other than crowdfunding for equity being a relatively new phenomenon, we hope to personalise the process more with the entrepreneurs, help them to make their pitches more crowdfund friendly, as we’re all heavily invested in Social Media from our previous roles.
Is it true to say that UK and Europe you can already crowdfund for equity?
In the UK it is certainly true, I can’t speak for Europe as a whole as each country has its own idiosyncrasies but I have certainly seen a few on the continent. Regardless, I think Europe as a whole is still far beyond the US in the progress of implementing equity crowdfunding.

Are there a lot of startups in the UK using this model?

The first online equity crowdfund platform has only been going for just over a year, so it’s a very new space. At the moment there hasn’t been many using the model but I’d put this down to its relative youth and we think it’s an area that is only going to get more popular with startups as well as more established businesses.

Can an American startup use Up And Funding and if so what are the steps they need to take?

What I can say is that there have been a couple of startups that we have talked to with both American and UK founders that are having a debate about where to incorporate. There have been startups that have chosen the UK because of this as well as the governments very generous schemes for investors in startups, the Seed Enterprise Investment Scheme (SEIS).
What’s your secret sauce?
The only thing that I could put here would be cliched so I will reframe!
What’s one dilemma you’ve encountered in the startup process?
Whether to take an Angel Investment or not was quite a big decision to take, losing a degree of control. It’s a similar dilemma that any startup looking to use crowdfunding, but ultimately a beneficial one for the majority of startups. In the end we have no regrets taking it.
What’s one challenge you’ve overcome in the startup process?
We spent a serious amounts of our time banging our head against the desk coming up with some terrible names for the business. I think creating a brand that is professional but at the same time isn’t too dry was a real challenge, so far I think we’ve done a reasonable job in that.
What’s the first thing you would do  with a one million dollar investment?
Take a holiday! But seriously, I think we would look to hire one or two more permanent staff to speed the process along and look to expand as soon as possible into different locations.
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