Crowdfunding ‘fuels revenue growth for SME’
AS THE UK’s political parties begin cosying up to business leaders to win their support ahead of the General Election, rebuildingsociety.com founder Daniel Rajkumar believes it’s high time that SMEs are seen as the ideal vehicle to deliver economic recovery.
Over 99.3% of private sector companies are SMEs, and collectively they employ some 47% of the private workforce, but Leeds-based crowdfunding entrepreneur Mr Rajkumar believes that government initiatives have consistently failed to support the sector.
“Measures such as the Growth Accelerator have had mixed success at the cost of the taxpayer, and the British Business Bank has failed to address the issue of money supply to SMEs because it has discouraged demand by pushing capital through select channels,” he argues.
“In December, David Cameron spoke to the British Chambers of Commerce annual conference, saying there was a £1bn funding gap. Crowdfunding – where businesses borrow from a community of real people, rather than the banks – is a way for small and medium businesses to avoid falling through that crack.”
The UK crowdfunding industry was worth an estimated £1.74bn in 2014, and is growing by upwards of 150% year-on-year. 70% of SMEs that have borrowed through the sector have seen their turnover grow since they secured funding.
“Crowdfunding is changing finance. It has positive social effects, but it’s also often cheaper for businesses and better for lenders,” Mr Rajkumar points out. “Businesses can drive down the interest rate they’ll pay by entering into discussions with members of our community.”
rebuildingsociety.com will be hosting its annual Alternative Finance Roadshow in Leeds on April 23rd , providing local entrepreneurs with the opportunity to learn how crowdfunding can help grow their business and letting them see first-hand the dynamics that peer-to-peer finance can bring to businesses.
The afternoon will see a Dragons’ Den style session with borrowers pitching to investors, and a series of workshops, one of which will demonstrate how businesses can get a better deal by borrowing from the crowd.
