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Why are more and more tech firms turning to crowdfunding?


When Facebook bought virtual reality firm Oculus VR for £2bn (£1.3m) in 2014, the crowdfunding world looked on with amazement. Oculus, founded in California in 2012, had raised its crucial first $2m on crowdfunding platform KickStarter, and became the first crowdfunded business to be valued at over a billion dollars.

Crowdfunding, it was widely observed, had moved away from its original purpose – raising relatively small sums of money for creative ventures – into a bona fide means of raising revenue. Crowdfunding has grown massively in popularity since 2014, particularly within the UK tech market, where, due to the experimental nature of tech innovation, traditional bank loans can be hard to come by.

The UK ‘alternative finance’ market ended 2015 worth £3.2bn, according to London-based think tank Nesta, constituting 12% of lending to British small businesses. Donation-based crowdfunding grew by 507% over a single year, with equity-based campaigns seeing a 295% increase....