Monday, 14 May 2012

Crowd Funding, What is it?

Crowdfunding is an alternative method of raising finance for a business project. Unlike traditional angel investment, in which just a few people typically take a larger share in a business, with crowdfunding an entrepreneur can attract a ‘crowd’ of people, who may not have invested in shares before, each of whom takes a small stake in a business idea, by contributing towards an online funding target.
 Crowdfunding is not new. In 1997 fans underwrote an entire US tour for the British rock group Marillion by pooling their money. The film industry first used Crowdfunding in 2002 and a Trade Association for freelance workers raised £100,000 in 1999.
In the UK there are two main types of crowdfunding:
Equity crowdfunding mainly used for funding start-ups and each investor receives an equity stake in the company and Debt crowdfunding, which is not used for start-ups, the company has to be at least two years old and the money is a loan over 1, 3 or 5 years.
The main benefit of crowdfunding, other than raising much needed capital, is that it creates a strong network of support for your company. The equity model is especially good at creating ambassadors for your brand, promoting it amongst their networks, family and friends and often becoming returning customers themselves.
How does it work? Although the rules differ from site to site, generally an entrepreneur will pitch his/her idea, set a fundraising goal and set a deadline for raising funds. Potential lenders or investors can review the pitches and decide if there are any they would like to support. Many entrepreneurs will also offer incentives to investors in the form of discounts and special offers. If the total required is not raised then the funding does not go ahead.  The procedure for a lending crowdfunding site is not quite the same. On these sites you have to decide what interest rate you want to receive and then you bid for a portion of the loan.
How do I choose which crowdfunding site to use? Here are my six top tips
·         Choose the right site. Do you want equity or debt?
·         Know your target audience and pitch accordingly
·         Plan ahead. A first class business plan is essential, good special offers for the investors are important and make certain you keep the interest going and have news items ready for each week of the investment cycle.
·         Be passionate., include images and think seriously about a video to really get your message across
·         Make certain you explain exactly how the money is going to be spent
·         Do not leave it to the crowdfunding site to find all your investors for you. Leverage all your family and friends and publicise it on all your social networks. No one wants to be first to invest so make certain that a family member invests a small amount right at the beginning and keep the momentum going. It is easy to get investors at the end but difficult to get them at the beginning.
If you are a small start-up with a product that can catch the general public’s imagination then equity crowdfunding may be the simplest and only way you may get your company up and running. If you are an established company but the bank will not lend to you, then debt crowdfunding could be the answer.
Crowdfunding is still only a small part of the fundraising scene in the UK, but it is growing fast and if the banks are not careful they will soon start to see a dent in their customer base. If you need funding then it is certainly worth your while looking into crowdfunding.

Wednesday, 9 May 2012

CPD Training Day: Raising Finance for SMEs 21st June 2012

Do you have cash flow problems? Do you have problems paying your VAT or PAYE? Do you struggle to finance new orders and to buy raw materials? Is your Bank being difficult? Do you want to launch a new product but just do not have the capital you need? Do you need larger premises but cannot get a commercial mortgage? Are you a start-up and need to find investment? Are you paying over the odds for your invoice discounting or factoring? These are just a few problems that demonstrate why you should be continually reviewing your funding needs and why you should attend this CPD training day.
During this Raising Finance for SMEs training day Peter Kelly and Alan Cottle will share their experiences with you .
The course will cover such topics as:
  • The right questions to think about concerning funding issues and what information you need to prepare.
·         The stages of growth that a company goes through and what are the best funding options for each stage.
·         Debt funding and the types available including EFG loans, commercial loans, commercial mortgages, overdrafts and asset finance
·         How to get the best Invoice Discounting or Factoring deal  including special single trade funders and single invoice funders.
·         Trade finance for manufacturing and importers
·         Equity funding including Angels, Venture Trusts and VCs
·         Funding for Companies in distress
·         The common mistakes that everyone makes and how to avoid them.
At the end of the course you will be able to ask the right questions, gather the required information and decide on the best course of action.
The course is open to all including your colleagues and your clients
The cost is only £175 + VAT
Registration is at 9:30 am for a 10am start and the day will finish at 4pm. There is a one hour lunch break and a coffee break in the morning.
The course will be held at the Greetham Valley Hotel Golf and Conference Centre,
Wood Lane, Greetham, Oakham, Rutland LE15 7SN

Telephone: (01780) 460444
To book a place for yourself and for your clients please contact either Peter Kelly, 01932 244810, or Alan Cottle, 01225 782934,
Remember the date: 21st June 2012
Here is some feedback from the previous funding workshops
‘A very informative day, lots of info and answers’
‘An excellent day’
‘A good and valuable day, thank you for your effort’
‘A very helpful course, met my aim of becoming more knowledgeable in my first funding conversation with clients’
‘I learned valuable knowledge that I can use when raising finance...... I expect to be in touch with you frequently.’
‘Clear and practical description and advice, definitely people I could work with’
‘Really useful day, invaluable’