The Business Lending Blog

Was Crowd Funding really invented in Ireland?

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Linked Finance

Welcome to Linked Finance!

The first of its kind in Ireland, we are delighted to bring crowd-funded finance opportunities to the Irish market. Firstly let’s be clear what the term ‘crowd funding’ actually means as there are various interpretations out there. It’s the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

Whilst it’s perceived as a very digital-age phenomenon, the notion of crowd-funding or micro-lending dates back hundreds of years. In fact our very own Jonathan Swift, referred to as a ‘father of micro credit’ started an initiative in the 1700s called the Irish Loan Fund. This fund provided loans to low-income rural-based families who had no credit history and little collateral but were considered creditworthy.

Small sums of 5 to 10 pounds were loaned out and repaid in weekly instalments of 2 to 4 shillings, without interest. To overcome any possible non-repayment, borrowers were required to have two neighbours guarantee the loan, both of whom would be notified in case of late-payments. In addition, Swift would take all three of them to court in case repayment was not made! This strategy clearly worked as there are no records to show that Swift suffered any losses in the process. By the mid-nineteenth century this was the form of lending to 20% of Irish households.

And so that’s a bit of background as to what this is all about, and the origins of this type of finance model. At Linked Finance, we are hoping to bring the qualities of collectivism and collaboration into how business is conducted for both those investing, and those on the receiving end of finance for their business.

There are many working examples of this in operation across the world today, for example a company in the U.S called Pebble Technology recently launched a new smartwatch, called the Pebble E-Paper Watch. This was funded by raising money through the crowdfunding platform Kickstarter. The company requested crowdfunding in April 2012 and by the end of the funding, Pebble had become the most highly funded Kickstarter project to date with $10,266,844 pledged by 68,928 people!

Over the next few weeks, we’ll share some more of these international case studies, and success stories with you. Equally we’ll meet some of the key figures advocating this style of financing for the Irish market, and learn more from them as to why they think this will enhance business finance options for growing Irish businesses.

As we progress, we also hope to share the knowledge and experience that investors and partners can bring to the community. Long after funds are initially raised, we want to offer continuing opportunities to learn and avail of skilled ‘been there, done that’ industry knowledge. As part of this community, people will be able tap into the experience of both the investors and recipients of finance through the Linked Finance platform.

Stay tuned as we bring you regular updates, domestic case studies and interesting examples of sustainable financing models in operation across the world.

Jonathan Swift, by Charles Jervas (18th century)


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