Fundraising expert Barry James takes a cold, hard look at the world of business advisors and asks if they really have the tools needed to support entrepreneurs.
The business advice industry, across the private and public sectors, is full of people with extensive experience of business success, of overcoming business challenges, bringing products to market, and creating great companies. I know they provide advice that their clients value.
But when The Crowdfunding Centre surveyed business advisors across the UK the vast majority said they are now, frequently, being asked about crowdfunding by clients – but they had absolutely zero experience of crowdfunding themselves.
Meanwhile, seed crowdfunding ( the Kickstarter model for example) has now grown to the extent that it is one of the main funding sources, alongside debt and equity, for startups, rivalling Start Up Loans in scale – and delivering 40 per cent more to the ventures it funds.
In practical terms this means that much business advice, if not actually misleading, is far from complete because almost all our business advisors have yet to get their head around crowdfunding.
Though unfamiliar, it’s a newer source of funding that can also be used to unlock these other, more familiar forms of finance – if you know how.
When you start to look into it this myopia is not so very surprising. We did, and found that not only is the terminology of crowdfunding extraordinarily confusing for people but on top of that no one has taken the time and trouble to give business advisors and other professionals in what is called the “access to finance” space the information and evidence they need to understand its various forms – and in a form in which they can access and use them to benefit their clients.
Again maybe not so surprising, given that it’s new…ish (actually it’s now well proven and established after more than a decade) – but it does mean that in this area right now, at the very least, some very big opportunities are being lost and, in fact, some very bad, incomplete, advice is being offered. This advice is from the very people who ought to know better.
So why the information gap? This dearth of support for the very people who, in the words of expert Kathleen Minogue of Crowdfund Better, can provide “the critical link in carrying crowdfunding over the chasm from the early adopter entrepreneurs – to the more pragmatic early majority entrepreneurs” who are not yet aware of it’s huge potential to fund existing and new businesses. As she also says: “Business advisors are the key”.
But these are professional people who need the facts, evidence and data presented in a framework (and with clear language) that enables them to fully grasp, and be able to advise, in this area with confidence. They need evidence and a coherent picture, not just opinion or enthusiasm – and when we researched what’s available the latter is what we found.
Which is why, based on data from and about 500,000 crowdfunds, I’ve written “New Routes to Funding”. It’s a tool designed principally to enable business advisors to expand their toolkit and add multiple new funding streams and sources – not just crowdfunding itself, although that too, but its ability to unlock other forms such as more traditional lending and equity.
How would you feel if, in hindsight, your business plans – startup, expansion or otherwise – had been needlessly thwarted because a professional business advisor had failed to tell you something vital, that they ought to have known? A source of funding that would have made all the difference?
My hope is that a year from now when you come to discuss your plans, and how you might fund them, with advisors you will get a very different response from the one you’re likely to get these day should you broach the subject of crowdfunding or dare to mention “alternative” finance.
I hope that they will be able to – whether asked or not – point out these new sources of business, growth and startup funding to you. And at least point you in the right direction to those that are appropriate to your circumstances and stage of growth.
If you get an explanation of the options, what they’re capable of and how each may (or may not) apply to you, how and why, then I suggest you award an immediate gold star. No, better still, two – and hang onto that gem of an advisor for dear life.
Otherwise, you now know where to point them before you make another appointment to get the good, complete, advice they surely owe you. Not to mention the funding you need to thrive.
Sign up to our newsletter to get the latest from Business Advice.