| Informed Funding |
Message from Chris Dines, CEO of Informed Funding
As you will see from this month’s newsletter, we have had another busy month! We have planned even more insightful events; collaborated with the Entrepreneurial Finance Hub who work with businesses to expand financing options and improve terms on which they receive capital; and our new look website has gone live!
If that wasn’t enough, we have also recruited new members to our team to support us in our quest to become ‘the biggest market place for business finance’ in the UK. Whilst we already have more than double the amount of funder microsites than any other platform, which are updated and managed by the funder directly, we also want to be able to provide you with the wider picture of the array of funders that are available. With this in mind, we are aiming to have 500+ microsites on the website by the end of September. Some of our new recruits will be focused on adding these microsites through research and populating the sites directly. This will ensure you have a fuller picture of the funders available and needless to say, will save you lots of time in having to search the web yourself.
We have also recruited new members into our marketing team who will be focusing on ensuring you are kept up to date with all our news, blogs, finance news and events via all the usual marketing mediums. If you haven’t already be sure to follow us on , , or so we can keep in touch. We would be delighted to get your news and feedback.
Regards
Chris
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As you will have seen if you have visited the Informed Funding, we have given our homepage a design makeover. But it is not just for aesthetic purposes!
Our homepage now makes it easier than ever for your business to get connected with the right finance. Business owners must simply follow the 5 steps and our platform will help you connect to finance providers that are relevant to your needs.
If you are a growing business looking for finance, please visit our website and follow the 5 easy steps and be connected with the right funders.
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Enhanced Search Experience:
To enhance the user search experience and output we are redefining the search question criteria:
Equity, example questions include:
· how much finance do you require?
· how long have you been trading for?
· what type of relationship with a funder do you prefer
· how soon will you need funding?
Debt, example questions include:
· how much finance do you require?
· how long do you need the loan for?
· how long have you been trading for?
· what security are you willing to give?
Our platform has more funders than any other platform available, and is constantly growing.
These more thorough questions will help our Informed Funding Platform find the finance your business requires more accurately and return even better results, so be sure to answer the questions as precisely as you can.
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If you are a funding provider and are interested in showcasing your products and services to a targeted and qualified audience via one of our microsites please contact us at [email protected].
Funder Microsite owners now receive complementary AFN corporate membership, giving them full access to the Alternative Funding Network.
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One of the more frequent criticisms levelled against P2P lending by sceptics is the suggestion that it exists only because interest rates are so extraordinarily low. Once rates move up, they suggest, it will be game over for the P2P movement, which in turn implies that there’s a causal relationship between extremely low interest rates and the appearance of P2P lending.
That might be true, but I haven’t seen any proof of it so far. It’s equally possible that there’s as much co-incidence as causation about low interest rates and the rise of P2P – after all, rates are low pretty well everywhere in the developed world but the P2P movement has shown earlier and more robust growth in the UK than in most other places. Might this be as much to do with factors such the level of consolidation in our banking system, changes in the appetite of the incumbents to lend, the approach of regulators to new entrants and the willingness of people in the UK to transact online, among many others?
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The mission of the Entrepreneurial Finance Hub (EFH) is to boost financing to high-growth businesses rich in intangible assets with a digital and physical platform. The EFH is a catalytic project of the Big Innovation Centre, founded by Will Hutton and Birgitte Andersen.
Registering with the EFH is an excellent opportunity for growth companies to expand financing options and improve terms on which they receive capital. Through a standardised, online process a company inventories and values their intangible assets, generating insights into intangible asset value within the company and greater analysis for funders. The EFH argues that it is not a funding gap, plenty of finance exists, but instead a risk and validation gap that prevents scale-ups from accessing growth financing. If more worthy companies are validated, risk is reduced and more financing will be available to the companies which will create the most jobs and drive economic growth.
The Entrepreneurial Finance Hub is excited to work with Informed Funding and other leading organisations to signpost scale-ups they work with to appropriate financing given their stage of growth and support their intangible asset development.
According to Andrew Gaule, who is leading the Entrepreneurial Finance Hub:
“We know that finance exists to fund these scale-up businesses, the barrier is that scale-ups and finance organisations are not making meaningful connections to begin filling the risk and validation gap. Working with Informed Funding we can begin routing our companies to the proper financing armed with data and tools to make their case to prospective finance organisations regarding what drives growth in their business, namely intangible assets.”
You can watch the EFH overview video at and join them at .
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We’ve all heard the endless stories regarding cash-strapped businesses being rejected by banks. In fact, some 250,000 businesses are rejected each year. However we know that “banks”, and there are an increasing number of them, remain by far the biggest suppliers of SME finance. Not only that, but the pressures of recent years means they have been working hard to change and better engage with their target market: anyone attending our Funding Fair on 26th February this year, would have learnt that.
At this event we take a fresh look at working with banks – how to find the right bank, how to go about your approach, and how to get your pitch in the best shape to get the best deal.
We’ll be joined by representatives from NatWest, Metro Bank, Barclays and Handelsbanken:
Roger Fenwick - NatWest's Regional Director ()
Andy Veares - Metro Bank's Head of Corporate BankingJo Farman - Barclays' South East Business Manager
Neil Higgs - Handelsbanken's Branch Manager ()
Who is this aimed at? Aspirational business owners.
When: Thursday 25th June 2015, 6:00pm to 8.30pm
Where: 154 -160 Fleet Street, , EC4A 2DQ
Cost: The Event is Free to Registered Business Members of Informed Funding. £75 (including VAT) to others. Tickets are limited.
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Following the success of our Funding Fair Launch at the end of February, we will be hosting another Funding Fair on the 24th September at the Metal Box on Southbank. We once again plan to have a full afternoon and evening of informative presentations, panel discussions and interviews with businesses that have benefitted from funding.
The sessions will be clearly focused on how SMEs can start to think differently about the way they might finance themselves. We will have a deep dive into P2P lending and also Crowd Equity where we will hear from some leading experts and funding providers, as well as hearing from business owners that have raised funds through these channels.
We will also be hosting a panel discussion on the future impact of technology on SME finance and how SMEs can think differently about the nature of financial transactions.
Details:
Thursday, 24th Sep 2015 at 12:00 to Thursday, 24th Sep 2015 at 21:00
Metal Box, 30 Great Guildford Street, , SE1 0HS
This September we are aiming to have 500 attendees, more trade stands, more clinics and equally as informative sessions, To book your place at the Funding Fair and to express an interest in the drop in advice clinics, please register HERE (https://www.eventbrite.co.uk/e/informed-fundings-funding-fair-tickets-17043004084).
If you are interested in sponsoring the event, or booking trade stand space, please email [email protected].
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Monday, 13th Jul 2015 at 18:30 to Monday, 13th Jul 2015 at 20:30Workspace Fleet Street | 154 - 160 Fleet Street , EC4A 2DQ
How can you get mentoring and support as a Charity Leader? What does good mentoring look like and how do you go about finding a mentor?
The event will be chaired by Alex Swallow, the Programme Director of the Charity Leaders' Exchange, and the event shall feature Richard Sved and Charlotte Hill.
How to access the seminar for free?
Leaders who hold senior roles from the UK's Charity sector may attend this seminar free-of-charge. We do ask that you help us by participating in our research.
Please contact the team to register for this event on [email protected]
What are your Paid Options?
If you wish to attend our seminar but don't wish to participate in our research, don't currently hold a senior role in your organisation, or if you're outside of the Charity Sector please contact us on [email protected].
There is a vast array of different types of funding options for businesses. In this newsletter we provide an overview on a further three funding methods firstly, with a deeper look into Equity Crowd Funding.
Crowd funding enables businesses to raise money by selling shares to the public, usually via an online platform. Investors can put in very small sums and normally benefit from tax incentives such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme. In some cases businesses selling shares can control the size and pricing of the offer.
The Informed Funding two-minute guide: Equity Crowdfunding
· How does it work?
There are several different models for equity crowdfunding in the market, but in essence all of them enable start-up teams and business owners to raise funds by selling shares direct to the public via online platforms. Businesses accepted by the platform will create a pitch that sets out their business case, trading history, financial projections, director profiles and – very importantly – a short pitch video. Pitches stay live for up to three months to enable investors to look at the documents, ask questions of the executive team via the website (which will publish the answers for all potential investors to see) and decide how much to invest.
· How much can I raise this way?
The sums raised through equity crowdfunding tend to be below the level where a lot of professional investors would become involved. These are therefore more akin to “angel investments” carried out by wealthy individuals. At the start-up end of the market, offerings might range from £20,000 up to £150,000, while slightly later-stage businesses typically raise around £250,000 although share offers of well over £1m are becoming increasingly common. In addition, businesses that succeed in raising their initial target amount can choose to “over-fund” by selling additional shares on the same terms as the original offer.
· What are the advantages of raising money this way?
Equity crowdfunding involves a minimum of legal cost and due diligence, which makes it a relatively fast and cheap way to raise equity finance. In some cases, business owners are able to set both the size and price of the share offer on a “take-it-or-leave-it” basis, rather than having to negotiate them with the investors as would happen in a conventional angel funding round. However, some platforms insist that each share offer has a “lead investor”, usually one or more business angels or an early-stage investment fund. They will negotiate the terms of the offer that will then apply to everyone else who invests alongside them. Qualifying investments made via equity crowdfunding platforms are eligible for tax relief via the Enterprise Investment and Seed Enterprise Investment Schemes, which offer tax breaks of between 30% and 50%.
· What happens if I don’t reach my funding target?
If your pitch fails to make its minimum target within the time allowed, your business will not receive any money. A fairly high proportion of all pitches on equity crowdfunding platforms (around two-thirds according to research carried out by Informed Funding’s sister organisation, the Alternative Funding Network) do not reach their target.
· What does it cost?
Platforms usually take a percentage of successful fundraisings as their fee. This ranges from 5% to 7.5% and may also include an element of “carry”, otherwise known as a share in the investors’ profits on any successful exits. There may also be fees to pay for legal work in setting up shareholder agreements and the documents that will set out how the company is to be constituted and run.
· How much do I have to communicate with my new shareholders?
Again this varies according to which platform you go with. In some cases there is no ongoing expectation from the platform that the business will continue to communicate with investors, in other cases there is. However, many businesses that use equity crowdfunding choose to communicate with their new investors and treat them as an important group of advocates for the product or service that the company offers.
· Need to know:
· Some platforms enable everyone that invests to become a direct shareholder in the company, while others act as a “nominee”, in effect representing the group of individual investors and dealing with the company on their behalf.
· Companies raising funds this way often find it pays to have a group of “friends and family” ready to invest as soon as the pitch goes live so that it is able to show backing from the outset. Experience suggests that people are reluctant to be the first to invest in a pitch, so early support is crucial
· Similarly, having a larger number of people backing your pitch rather than just one or two (even if they are committing large sums) can make a difference.
· Equity crowdfunding does not let you choose which investors you accept, so it makes sense to ensure you attract some people with relevant knowledge, experience and contacts among your “friends and family” investors. That said, businesses that have succeeded in raising funds this way have frequently found that among their “crowd” on investors in any case are people with knowledge of their industry.
Expert Tips:Having a number of investors can mean that you can retain greater effective control. However, keeping everyone satisfied can be more difficult as investors may have different objectives e.g. capital growth versus a revenue stream.
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Angel Networks
Probably the most common way for start-up and early–stage companies to raise funding is via groups of business angels – often experienced entrepreneurs who acquire shares in early-stage businesses using their own funds. Angels often invest in groups, or syndicates, and may take one or more seats on the board of the investee company, providing expertise and contacts as well as finance.
Venture Capital
Venture Capital funds buy shares in young companies that are at a fairly early stage of their growth. Companies that raise funds this way will normally be generating revenue but may not yet have reached profitability or be breaking even on a cash flow basis. However, some VC firms also back start-ups. Venture capital investments typically range from a few hundred thousand pounds up to £2m-plus.
You can see our recent blog on Venture Capital HERE.
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