05 February 2013

UK university investing in online crowd funding

A British university is looking to bypass banks in an attempt to generate money for future bursaries, providing funding for business through peer-to-peer lender, Funding Circle.

Huddersfield University has developed a unique plan to offset fee increases by joining an online crowd funding website designed to offer low cost loans to business, while at the same time giving investors better returns. The university will invest £100,000 in the crowd funding concept, with the money being spread across many businesses to reduce the risk component.

James Meekings, co-founder of Funding Circle, said it would be the first of many such partnerships with universities. Talking to the Financial Times, he said: “They have money to invest. They can help business and make a return and also help to educate the next generation of business leaders. It is a virtuous circle. It improves the business ecosystem.”

Virtuous certainly seems an apt description of the innovative move. Not only will the university be providing funding to a pool of businesses, but the money gained in return will then by siphoned off to disadvantaged students who are struggling to pay fee increases. The higher learning establishment announced it would charge students £7,950 from the start of this academic year, a steep increase from fees charged in the previous year.

Businesses will also benefit from access to the university’s research facilities, including a recently opened £12million 3M Buckley Innovation Centre. Students will benefit from seminars and internships, which could help to curb the current youth unemployment crisis that currently faces the country.

Theo Paphitis, the Dragon’s Den panellist and owner of retail chains Ryman and Robert Dyas, who is involved with the university’s Enterprise Development degree, said it was a “pioneering step”. Representatives from the funding circle say it lent a record £8 million in December, up from £1 million a month when it started.