A recent study by Ernst and Young has revealed that the biggest challenge entrepreneurs face is a lack of funding, cited by 33% of respondents.
Lack of funding is particularly problematic for young entrepreneurs, who do not have significant personal assets to secure a loan.
But 23-year old Sydney-based entrepreneur Ryan Wardell thinks he’s found an alternative to traditional funding sources. His company, Project PowerUp, bills itself as ‘Australia’s first crowdfunding platform for startups and small businesses.’
Entrepreneurs can use the Project PowerUp website to pre-sell their product or service, and then use the proceeds as seed capital to start their business.
“The beauty of crowdfunding is that you don’t have to pay the money back, unlike a loan, and you don’t have to give away any equity either” Wardell says.
“It’s about getting you over that first hurdle – which is always the hardest part”
Leading business magazine Australian Anthill last week named Wardell as a 30under30 Up-and-Comer for his involvement with Project PowerUp.
Crowdfunding sites like Kickstarter and IndieGoGo in the US have raised hundreds of thousands of dollars for artistic projects. But can the crowdfunding model work for startups as well? Wardell is putting his money where his mouth is – he’s using Project PowerUp to crowdfund itself.
“We’re so confident it works, we’re using it ourselves. Project PowerUp is the first crowdfunding site in the world to use its own platform to launch itself.”
Project PowerUp has already caught the attention of dozens of successful and aspiring entrepreneurs across Australia.
“I think it’s a great idea. When I started out in business, the only seed capital you could get from banks was called multiple credit cards,” quips Jeremy Liddle, co-founder of RioLife which won the Sage Fastest Growing Small Business Award 2010.