Tech companies aren’t only innovative in their business ideas; increasingly, they’re getting innovative in how to fund business ventures. We saw this with Initial Coin Offerings, and now a number of companies are turning towards crowdfunding for finance.
Honcho, creates a “reverse-auction marketplace” where insurance companies bid for clients. The company set itself a £650,000 funding target, which it aimed to achieve through crowdfunding. They surpassed this within 9 days, reaching a final amount of £850,000.
Startup InMyBag, has also gone down the crowdfunding route, financing their high speed, gadget insurance. Within the past year, they’ve reached 66% of their target funding, over £300,000.
So why are companies choosing crowdfunding as a source of funding? Honcho turned to crowdfunding after losing EU funding that they were reliant upon. Others may want an injection of Capital, without becoming tied to investors, or having to mould to investors’ wishes. For many, it represents a community based, decentralised financial system that allows them to keep their autonomy in the day to day functioning of their business.
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The start-up had initially secured EU funding, but when this was put on hold indefinitely, its team took matters into its own hands and began crowdfunding Insurtech start-up Honcho has raised £850,000, after EU funds to support it were put on hold. The start-up, which describes itself as a “reverse-auction marketplace” where insurers bid for customers, had set an initial funding target of £650,000.