YORK has enormous creative wealth and a buzzing creative scene, which contributes widely - both socially and economically - to the city.

The economic downturn has changed the way banks lend and, with traditional paths closed to them, these entrepreneurs - and many other businesses - have sought alternative routes to securing financial support.

Among them is crowdfunding, and we are seeing a sharp rise in its popularity as a means for entrepreneurs to achieve financial support for new ventures.

The principle itself is simple. Rather than securing a significant sum from a single funding source, crowdfunding works by securing smaller contributions from a large number of people.

Often this is done in return for a stake of some kind in the project - your name on an album sleeve, a character named after you.

A side benefit of crowdfunding is that it allows entrepreneurs to develop new products or services with greater market insight for an audience that is actually prepared to put its hands in its pocket to support an organisation it admires.

Crowdfunding is turning traditional funding on its head, and attracting funding via this route involves appealing to potential funders in a very different way to impressing the bank manager with business forecasts of financial sustainability.

Universities are seeing the benefits, too, reigniting alumni engagement by using it as a means of getting feedback from existing and previous students, as well as seeing existing students and on-campus businesses launch their own projects.

We also have high profile crowdfunding success stories here on our doorstep. Revolution Software, the York-based computer game design company, used the Kickstarter platform to raise money for the development of its The Serpent’s Curse game, part of the Broken Sword series, inviting fans to invest in the game in return for creative input.

A reported 4,032 people collectively helped the company raise enough money to support the launch.

Crowdfunding is not without risks. Posting new ideas on sites and putting them in the public domain means they could be copied.

Sites don’t protect intellectual property and people submitting ideas would be wise to seek independent advice about protecting intellectual property. We also saw recently how Doncaster Rovers and Louis Tomlinson’s attempts to raise £2million through crowdfunding failed.

One thing is for certain – it encourages businesses to think creatively and engage with audiences in ways traditional funding have never demanded.

I wonder how many more local businesses could benefit and take off from such a launch pad?