Like all of us, I am often asked what I do for a living. I normally reply that I run a matchmaking service.  The company I work for - Sapphire Capital - matches investment opportunities with investors (and vice versa).  We have been doing this a long time and anyone involved in this business will have empathy with me when I say that it can be very frustrating and painfully slow, even at the best of times.

For example, a residential property fund we advised took almost nine months from the start of the process to the close.  It wasn't even a particularly large property fund, raising £6.9 million, but the writing of the information memorandum, the due diligence, the legal review, promotion and fund raising process by the operator and manager seemed to take forever. I always seem to forget how long the process can take.  We are currently advising a proposed Jersey regulated expert fund investing in UK residential property and it has already been six months in the making not yet completed. 

So it comes as some surprise when I read on crowdsourcing.org that the average time it takes to raise money on a typical equity crowdsourcing platform is eight weeks.  Two months is a very short period of time to fund a startup, no matter what sector it is in.  For lending crowdsourcing, it is even shorter at 4.8 weeks. 

Times can be even shorter.  In the USA, it is reported that Doublefine launched a campaign on Kickstarter.com to raise $400,000 in a 32 day period. It raised the $400,000 in eight hours.  It raised $3.3 million in the 32 days and the average amount contributed per person was £25 ($40). 

This is the most important reason why we embrace crowdfunding - it can significantly reduce the time taken to raise funds and therefore reduce the time taken in the whole fund raising process. 

The first question we always ask when an entrepreneur proposes a new fund or startup to us is "where is the money coming from?"  With crowdsourcing, this one question has been answered.  The crowd will either support you or not.  Welcome to the age of online venture capital.

Of course, it would be remiss of me not to point out that there is still a significant lead in time before any startup can get to the stage of listing on a crowdfunding platform.  Investor information still needs to be properly prepared, along with the correct FSA disclosures etc. - the same as any offering to a sophisticated or high-net-worth investor.  This bit has not changed.

Crowdfunding is here to stay and is going to be big.  By the end of 2012 crowdsourcing.org estimate that circa $2.8 billion was raised through it.  We know it is not perfect yet with many issues to be addressed.  But anything that helps our business sector raise much needed funds has to be a good thing, right?  Crowdfunding companies such as Seedrs.com which primarily promote companies which qualify for the Seed Enterprise Investment Scheme (SEIS) gets our full support.  Especially since it is FSA regulated - which we support. Crowdsourcing also fills a void which has been left by the banks and helps those companies which are just too small for venture capital firms to be interested in. 

There is also the added bonus of co-investment with professional investors which offers some degree of protection for non-sophisticated investors. The challenge remains however for crowdfunding websites, how to get the professional investors to participate.

Crowdfunding is big business. It provides finance as well as access to a large number of people who can test a startups idea. Perhaps most significantly, it can reduce the time a startup can take to raise finance, which in this market, has to be a good thing.