Crowdfunding in the United Kingdom: A Cultural Economy

Abstract

Crowdfunding is a digital economy in which funds provided by large numbers of individuals (the crowd) are aggregated and distributed through online platforms to a range of actors and institutions. In the United Kingdom, crowdfunding is a particularly diverse and dynamic economy: the forms taken by funding now range from donations to business loans and the issue of equities by start-up enterprises, and recent rapid growth is concentrated in the financial market circuits of crowdfunding. This article analyzes the changing composition of the crowdfunding economy in the United Kingdom as a process of financial marketization and develops a sympathetic critical engagement with cultural economy scholarship on the geographies of money and finance. Consistent with previous cultural economy research into sociotechnical processes, the financial market circuits of crowdfunding are shown to be produced through the mobilization of economic theory and the enrollment of calculative market devices. When calling for a broadening of the existing analytical remit of cultural economy scholarship, however, emphasis is also placed on both regulation and governance and monetary valuations as constitutive and relational forces in the assembly of markets in the making. Regulation and governance are shown to deploy sovereign powers and techniques to territorialize, legitimize, and bolster the financial market circuits of crowdfunding. Money, meanwhile, is shown to play a dual role. While it certainly enables calculative and marketized valuations, money simultaneously creates scope for a multiplicity of values to be inscribed into its circulations such that the diversity of the crowdfunding economy persists and proliferates amidst financial marketization.

Key words:

• crowdfunding
• peer-to-peer lending
• finance
• marketization
• money

Acknowledgments

The author acknowledges the support provided by Durham Geography’s Research Development Fund for the research that underpins the article, and also thanks Christian Borch, Gavin Bridge, Chris Clarke, Brett Christophers, Andrew Leyshon, John Morris, Matthias Thiemann, and three anonymous reviewers for their comments on earlier versions of this article.

Notes

¹ Confidential interview, representative of an equity crowdfunding platform, London, July 8, 2014.

² Confidential interview, two representatives of the Financial Conduct Authority, London, July 9, 2014.

³ Confidential interview, representative of a fixed-income crowdfunding platform, London, July 7, 2014.

⁴ Confidential interview, representative of a P2P lending platform, July 9, 2014.

⁵ Confidential interview, representative of a P2P lending platform, July 9, 2014.

⁶ https://www.fundingcircle.com/investors.

⁷ This crystalized for me at the Personal Finance Society’s London Region Conference on Crowdfunding and P2P Finance (London, November 11, 2014) at which I conducted a participant observation. The event was staged to introduce financial advisers to the financial market circuits of the crowdfunding economy as a new asset class, but the roundtable discussion was dominated by the expectation of due diligence. It was stressed by advisers that fee-paying, high-net worth clients would actually expect due diligence to be undertaken on their behalf, and that this would create additional burdens (time, legal, expertise) that could not be easily covered by existing fee structures.

⁸ See, respectively, https://www.seedrs.com/invest/why_invest_in_startups#invest and http://www.crowdcube.com/pg/investing-your-money-1513.

⁹ Confidential interview, representative of a P2P lending platform, London, July 11, 2014.

¹⁰ Confidential interview, two representatives of the Financial Conduct Authority, London, July 9, 2014.

¹¹ Participant observation, Peer-to-Peer Finance Policy Summit, London, December 7, 2012.

¹² https://www.abundancegeneration.com/.

¹³ http://blog.abundancegeneration.com/2014/10/is-your-money-stuck-in-neutral/.