The Spectrum Of Online Funding


What has been interesting to observe over the last few years has been the emergence of a myriad of internet enabled funding websites, some for loans, others for equity capital.

They have all sprung up on what I regard as the “spectrum of online funding”, the left hand side of the spectrum being the preserve of seed funding, the right hand side being for IPOs on the likes of the Alternative Investment Market. ( “AIM” )

At the seed end of this spectrum we find seed funding websites such as Seedrs and Crowdcube, while at the other end, we find AIM and ISDX, which are platforms for publicly listed securities.

Dotted in between are the likes of Crowdbank, Angels Den, Syndicate Room, and Investing Zone, all providing different variations on the theme, but essentially all aiming to connect entrepreneurs and investors, using the internet as the medium of initial connectivity.

We also find the likes of Asset Match and Liquity, providing ‘secondary’ market liquidity for existing shareholders in private companies.

Big gorillas in the room also include platforms like AngelList and Gust, albeit these seem to be more U.S. centric, but trying very hard to make an impression on this side of the water.

Forgive the extremely poor pun, but the marketplace feels a tad ‘crowded’, it will be interesting to see who the winners are as they jostle furiously for business in a hotly contested arena.

I imagine there is already a team of super-techies out there building an aggregating site, where investors can see the best of all these funding platforms in one place, a Skyscanner equivalent for venture capital.

What’s even more intriguing is the emergence of business services platforms which add an extra layer into the ecosystem, providing much needed affordable resources to the entrepreneur.

I have been impressed by Lawbite, Clive Rich‘s platform which seeks to democratise the law, and eat into the cosy cabal of the big-fee law firms, which entrepreneurs can scarcely afford.

One can get a 15 minute consultation with the Lawbite team, plus download bundles of standard legal documents formats from as little as £64! A bit cheaper than £500 an hour!

Also popping up on the scene is Invrep, a subscription based platform, for providing reporting tools for small companies, so they can better inform their shareholders, and maintain good levels of corporate governance as they grow. Stephen Findlay, the founder, is a smart cookie, and has seen both sides of the fence, both as investor and entrepreneur, so he has seen the worst of early stage reporting and governance, and has created Invrep to smooth the lines of communication between entrepreneur and funder.

Fund My Business has developed a set of cloud based tools, which any budding entrepreneur can access from as little as £17 a month, to build business plans, teasers, and financial forecasts, such tools having been vetted by the British Venture Capital Association.

Basically they are a timely nudge to entrepreneurs that this is the way the BVCA‘s investor members would like to see this type of information presented to them, and not in the myriad different formats that entrepreneurs submit to potential investors, which only encourage the investor to move his mouse towards his delete button.

The beauty of these business services platforms is that they create extremely economic resources for the budding or progressing entrepreneur to get his or her house in order, when seeking funding, or once funding is secured, to keep the lines of communication clear with the investors.

Here at Match Capital, we too continue to connect entrepreneurs and investors, using our bespoke algorithms, calculating who is the most relevant investor, based upon the investment profile the entrepreneur submits to our system. I see us sitting on the aforementioned spectrum of online liquity somewhere between the crowdfunding sites and the secondary sales platforms. The capital raises we have been involved in are somewhat larger than the average crowdfunding raise, our biggest to date being a £2m raise for Atterley Road.

We have been examining closely how to partner, though, with the likes of Fund my Business, Lawbite and Invrep, amongst others, to see how we can collectively aid the entrepreneur all the way through the funding cycle, making it a more streamlined and ultimately successful experience.

Peter is the founder of Match Capital, a platform algorithmically connecting entrepreneurs with relevant investors.

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