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Crowd-sourcing Finance - A New Funding Model?
By Jeremy Parsons, Pitch & Mix

At a recent Pitch & Mix session, the subject of crowd-sourced funding was brought up for discussion. What emerged from the discussion has been summarised below. Hopefully it will be of help as a starting point for others looking at this as a funding option.

The summaries are recollections or opinions plus a little supplementary desk research - please check the detail for yourselves rather than relying on this list as definitive!

Person to person (P2P) loans

Typical platforms make some kind of risk assessment, offering private borrowers access to many private individuals prepared to lend money at their own risk, and private lenders syndicated access to many potential loans and the ability to self-manage their risk profile.

Zopa - Operating for over 5 years, sums up to £15k
RateSetter - £10M of loans made(?)

Person to business (P2B) loans

Similar to P2P, only the borrowers are businesses.

Funding Circle - Loans £5-100k - credit checks, Directors' personal guarantees may be required in some cases
ThinCats - Secured business loans

Crowdsourced equity funding

Does what it says on the tin.

CrowdCube - Based out of Exeter University incubator

Connecting with business angels

A tool to connect with business angels from beyond known individuals and networks:

Gust (formerly Angelsoft)

Comments

Some of the points that were made in discussion

* It's important to understand the full detail of the offer
* There's a risk of over-disclosing sensitive information to a large and un-vetted population
* It's important to self-impose the kind of diligence that a commercial bank would apply
* Giving equity to strangers may limit the options for angel investors
* As UK commercial banking is 'rebuilding its balance sheet,' it's fully plausible that crowdsourcing funding may already be, or may become, a more efficient market for debt finance

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Pitch and Mix is an opportunity to connect with the startup / entrepreneurial community in Cambridge.

It's regular - every Thursday morning. It's central - at Clowns Cafe, 54 King Street, home (we think) to the best coffee in Cambridge. It's accessible - 5 minutes walk from Park Street car and cycle park. It's informal - you're welcome whether you want to build a go-to-market team for your new venture, or to shoot the breeze with other interesting people. And it's structured:

* open from 8:45
* the opportunity for a quick pitch or introduction round the room at 9:15
* networking time and a speaker or hot topic discussion at 9:30

Guaranteed over by 10:00 (though stay as long as you like).

Pay for nothing but coffee. Pitch if you like. Mix all you want.

Hope to see you there!

Last updated: 27 oct 2011

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