So many small businesses don’t realise the wealth of alternative options available at their very fingertips. That’s why our partner, Informed Funding has organised a seminar afternoon with finance providers as well as business owners who have gone through the process.
The small businesses
Rod Brown, is the CEO of the disruptive proptech home improvement brand Opun, which was one of the first businesses to launch a lift round on SyndicateRoom's platform in 2015.
The former officer in the Royal Navy and ex-managing director of consumer technology companies The PC Guys and Tesco Tech Support has had a lot of experience raising funds in different ways: "We raised seed funds from angels found on LinkedIn; we had an interim raise from existing investors following up and some new investors, with lift round top-up from the SyndicateRoom. Our Series A was completed with Aviva Venture Capital in February 2016," said Rod.
Rod has a wealth of advice on how to raise money through equity investment, as well as honest insight into the administrational burden this way of raising money can incur – but “whatever the administrative pain, we love our smaller shareholders, who have become Opun brand advocates, which is fabulous.”
Steve Folwell, Managing Director at LOVESPACE, the first storage-by-the-box company in the UK, will also be at the seminar. LOVESPACE has successfully raised money on the crowdfunding platform CrowdCube twice, overfunding the 2014 target by 260%.
Steve is full of excellent tips on how to manage the process: "Generally, the questions that have been asked on the platform are quite straightforward to provide an answer to. It has also helped to have supporting information easily at hand to be able to get back to investors promptly."
The need for organisation is echoed by another speaker, Anthony Waller, Corporate Partner and Head of Technology at Olswang LLP. Anthony deals with all aspects of corporate work whilst acting as Joint Head of the firm's Technology practice and the head of the firm's Corporate Technology practice. He founded the Olswang equIP Programme and leads the team focused on high-growth technology companies, acting for both the companies themselves and investors into the sector. Ahead of the afternoon, Anthony said:
“My advice to growth companies looking for finance is to focus on the three 'K's. 1. Keep it simple – don't let your share capital get complicated, nothing is more likely to put off future investors. 2. Keep it organised – an organised company is a more valuable company. 3. Keep it! Of course, you need to give away share capital to secure finance but be careful not to give away too much.
“Think about the next round and the next round after that. Make sure you leave enough room for future dilution. Looking for alternative means of finance that don't impact equity may well be a sensible solution for you.”
Keep it simple – don't let your share capital get complicated, nothing is more likely to put off future investors.
Anthony Waller, Olswang LLP
The alternative finance providers
“Credit ratings for small businesses are less to do with how the companies have performed, but more to do with the behaviour of the owners behind the companies,” emphasised Amit Sankey, who’ll also be speaking on November 22. “For example: are the company's records up-to-date with Companies House? Are full accounts filled or abridged accounts, even as far as has the company paid its electricity bill on time or does it pay consistently late?”
Amit, the former entrepreneur and founder of Wirefund, a loan facility that could offer its customers a daily repayment option, stressed the importance of clean books: “To get a good credit rating, businesses owners need to ensure that they are extremely organised when it comes to their companies’ admin as this will result in a better credit ratings, which will in turn result in access to more finance.”
There will be access to more finance and a greater variety of it. That’s the view of Steven Renwick, founder of the invoice finance company Satago, who will also be a part of the panel as a provider of a new generation of alternative finance.
Steven is particularly interested in the funding challenges faced by younger companies and start-ups. Average turnover of his customers is less than £500,000, although they do have one or two with a turnover of above £20m. “We think the sweet spot is younger companies that are digitally savvy and use cloud accounting software but that don’t have very deep bank relationships.”
Francesca O'Brien, Head of Private Markets at the online equity investing platform SyndicateRoom, offered a cautionary note on the rapid growth in the industry: “The industry is going through a development phase as the major players seek to define and differentiate themselves. Thus whilst the industry is becoming more varied and diverse than ever - offering more and more options to the market - it's also becoming more confusing.“
Alternative finance is something that all small businesses will need to grapple with. “As far as trends go in the industry, by talking to my customers and seeing the landscape in alternative lending growing,” Amit Sankey says, “I am convinced that alternative finance will end up as the primary source of finance for small business.”
Whilst the industry is becoming more varied and diverse than ever - offering more and more options to the market - it's also becoming more confusing.
Francesca O'Brien, SyndicateRoom
Anthony Waller ended on a positive note: “The UK and Europe are home to some of the best and brightest of technology businesses on the planet and currently businesses based here look to be better value than in other jurisdictions. Securing international finance can open up a wealth of opportunities to bright growth businesses looking to scale on an international stage.”
Find out more about Informed Funding’s upcoming seminar ‘Equity Options - Finding the Right Investors for your Business’ on Tuesday, 22nd November here.
Club Workspace members and Workspace Customers have free premium access to Informed Funding including free membership and preferential access to their seminars.