A growing form of raising finance for start-up firms was presented to professionals at a north-east seminar yesterday.
Crowdfunding, which raises money from investors or lenders through online marketplaces, is growing fast in the UK.
Around 70 people attended the seminar, in Aberdeen, which was presented by Derek Bond, the co-founder and managing director of Scottish crowdfunding site Squareknot.
Founded in September, the firm’s platform has recently raised over £50,000 for Darlington Football Club, which fell into administration for the third time in December.
Mr Bond said the company was looking to attract both potential investors as well as young firms looking for investment or loans in the north-east.
He said crowdfunding worked well alongside “angel investors”, who tended to take larger direct stakes in companies.
“As long as it is done where the angel syndicate keeps control of the deal, they are happy having another 20 or 30 people putting in money alongside them.”
Aberdeen wealth adviser City Financial co-hosted the breakfast meeting, at the Dutch Mill Hotel.
Hamish Malcolm, a consultant with City Financial, said: “It is the first time a platform has presented to a forum in Aberdeen.”
Last year, people spent £28million investing in companies through crowdfunding platforms – a 600% increase on 2012.
There was a further £480million loaned by consumers to individuals and businesses – known as “peer-to-peer” lending – in 2013. That represented a rise of around 150%.
The seminar came as the consumer finance watchdog announced plans to regulate the crowdfunding marketplace.
The Financial Conduct Authority (FCA) this week introduced new rules designed to protect individuals who take stakes in companies or offer loans.
The FCA already regulates securities-based crowdfunding but it will also impose rules on private lenders from April.
The new rules mean people investing money in companies through internet sites will only be allowed to invest up to 10% of their assets unless they have financial advice.
Mr Bond welcomed the new rules but said he was disappointed that they applied to amounts below £1,000.
“If someone wants to put in less than £1,000 there should be no regulation,” he said.
“It is a small amount of money. If you want to put £100 in it is regulated.
“You can put £10,000 down on a horse in a bookie’s and no one questions it.”