Would your business stand out in a crowd?

Crowdfunding, or Peer-to-Peer Lending (P2P),  continues to hit the headlines; and for all the right reasons it seems.

Recent figures released by the University of Cambridge and Nesta confirm what most commentators had already guessed – the crowdfunding business continues to grow.

The report, detailing the progress made by online alternative finance providers during 2015, highlights the fact that £3.2 billion of finance was raised with £2.2 billion of it going to UK SMEs.

The total is up on the £1.74 billion raised in 2014 and estimates suggest that just under 4% of all SME loans made in 2015 came via this method of finance.

Safety in numbers

The great news for SMEs of course is that it underlines the fact that there is often a very real alternative out there when other avenues of funding appear to be closed.

By turning the old lending ethos on its head, whereby large sums of money were lent by a few investors, the crowdfunding model, where smaller sums are lent by a large number of people has given even the armchair investor the real opportunity to help boost the UK economy.

The ducks still need to be in order

The important thing to remember however is that although the use of state-of-the-art technology often means faster turnaround times the same basic rules apply. It may not be a grey suited banker sitting in a panelled boardroom that needs convincing but these armchair investors are just as savvy when their cash is on the line. Indeed many of them are professional investors.

Whether looking for cash in return for a share in a new venture or a straightforward loan, a business is just as likely to be turned away by this new breed of funders if it presents a half-baked idea or some uninspiring figures and projections.

The bottom line ease of access is not a panacea for being underprepared.

The crowd gets bigger

As with most successful products the number of providers hitting the market continues to grow. Some of them will be industry specific whilst some of them will be either equity or loan based in their approach.

To make the search for an appropriate one easier, it is always worthwhile speaking to someone that knows the criteria requirements across the sector and can find the best fit.

Without some help it could take an age to get eye to eye across a crowded room.

By Steve Leeves