Yorkshire and North East Dealmakers Guide 2016 - 18

18 GROWING YOUR BUSINESS CROWDFUNDING PROS ■ A quick and straightforward means of raising funds with little or no upfront costs. ■ An alternative source of funding when traditional routes have failed. Equity crowdfunding Individuals invest in a company or a venture in exchange for equity (either shares or a stake in the business). The value of the stake will increase if the business or venture is successful, but will fall if unsuccessful. Debt crowdfunding (or peer-to-peer lending) Investors receive their money back with interest. Initially created to provide small loans, there has been a significant increase in its use. OTHER PACKAGES businesses in the North East start up, develop or grow. There are seven funds designed to provide a range of investment, managed by Rivers Capital Partners, Northstar Ventures, IP Group, FW Capital and NEL Fund Managers. ■ A good way to market the product or service you are looking to crowdfund. ■ A good online system of sharing ideas with, and getting feedback from, investors in the business. ■ A way of engaging with the wider FINANCE FOR BUSINESS NORTH EAST (FBNE) Also known as JEREMIE, the FBNE was established in 2010 by North East Finance. In April this year a £17m topup was agreed, to be invested in the region's fastest-growing businesses. http://www.northeastfinance.org/ networks that investors inevitably have. CROWDFUNDING CONS ■ Not an easy process; it can take a long time, a lot of work and a precious resources to build the platform, then build the interest before the crowdfunding can start. Factoring Typically used by businesses that have slow-paying customers, a shortage of working capital or where it needs protection against bad debt losses. The lender agrees to pay an agreed percentage of approved debts and the balance is paid when customers pay. YORKSHIRE FUNDS Invoice discounting The provider will lend as much as 85 per cent of approved invoices. Typically, payments will be made to the business administered by the invoice Sheffield City Region Growth Hub Secure funds are available from a variety of sources including, where appropriate, grant funding through the £22m Business Investment Fund. discounter, after which you are credited with the balance, less charges. https://www.scrgrowthhub.co.uk/services/access-to-finance/ GRANT FUNDING NORTH EAST FUNDS Growing the Humber Local Growth Fund The Humber LEP's Growing the Humber LGF programme is a £4m scheme. http://www.humberlep.org/business/ growth-hub/ Leeds city region local enterprise partnership (LEP) The LEP provides grants of between £10,000 and £500,000 to SMEs in the Leeds city region, or planning to invest there. http://www.the-lep.com/for-business/business-finance/ ■ Not guaranteed to succeed; not all crowdfunding projects reach the required target, in which case money pledged needs to returned to the investors. ■ If the project fails, this can have severe reputational damage to the business and will put investors off FUNDING any future crowdfunding exercises that might be considered. ■ There are patent and copyright issues to consider; the concept of the product or business idea can potentially be stolen if not protected. ■ Investors want a return on the investment, and this may eat into any future profits that may accrue The £142m Finance for Business programme provides debt and equity finance from £1,000 to £1.25m to help from the crowdfunding project. http://www.northeastfinance.org/ http://www.the-lep.com/for-business/business-finance/ http://www.the-lep.com/for-business/business-finance/ https://www.scrgrowthhub.co.uk/services/access-to-finance/ https://www.scrgrowthhub.co.uk/services/access-to-finance/ http://www.humberlep.org/business/growth-hub/ http://www.humberlep.org/business/growth-hub/

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