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Should Corporate Finance teams use equity crowdfunding?

Funding Masterclass                                             

I attended a very interesting masterclass on funding for early stage growth businesses recently at the Newcastle-based Watson Burton solicitors. There was a cross-section of speakers, including a VC, business angel, fund managers and an entrepreneur who gave a very engaging “real-life" experience of the fundraising and exit process.

Arriving early, I had the fortunate opportunity to meet a couple of well-connected professional advisers who are active in the corporate finance marketplace. Indeed, I later found out that one of the professionals, Michael Smith, was recently awarded “Corporate Finance Dealmaker of the Year", so I was in excellent company.

Is Crowdfunding an option?

The conversation flowed and the subject of equity crowd funding popped up. I was curious to hear their views on the subject and the potential for crowd funding to be part of their funding options. T

heir feedback was extremely positive as they could see the potential for solving a number of the "barriers to finance" as highlighted in the Watson Burton survey of North East and Yorkshire based businesses.

The key barriers in the survey report were identify as;

  1. Funds simply not available
  2. Too much control by funders
  3. Associated costs.

How does crowdfunding break the barriers down?

Equity crowdfunding has the potential to cut right through these barriers. By providing growth capital from a wider base of investors, it ensures that funds are available for the right deals. Control remains with the entrepreneurs and using a platform like GrowthFunders provides a cost effective solution by streamlining the fund raising process.

As well as breaking down the barriers to finance, equity crowdfunding allows corporate finance teams access to;

  • Tax efficient investing for their existing clients
  • SEIS and EIS investment opportunities
  • Access to a wider base of sophisticated investors and high net worths
  • Co investing - working alongside banks or business angels

Indeed, the above list includes just a few of the potential opportunity areas that equity crowd funding can offer, along with collaboration opportunities with GrowthFunders.

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Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.