introduction To contents


Aside from friends, family, founders and fools – the traditional four sources of funding for a growing company – there aren’t many options for financing an early-stage business. Recently, however, there has been an exciting


growth in social funding websites – a new breed of finance provider that allows ‘armchair investors’ and savers to lend directly to businesses. The rationale is simple. The punters get equity or an attractive rate of interest, and businesses get their cash. Some believe the model will change the face of small business finance, while others think such platforms need to improve their marketing to even stand a chance of competing with the banks. It’s early days yet for the industry. Perhaps the best-known of the offerings, Funding Circle, only launched in 2010. Promisingly though, it has already funded some 800 businesses to the tune of £37 million. Those interested in pursuing social funding should be aware that they have a choice of giving away equity in exchange for investment, or simply taking out a loan. This guide looks at the benefits of each, using case studies of businesses that actually achieved investment alongside expert advice from the horse’s mouth – the founders of the companies themselves – on how to secure the money. We hope you find the guide useful, and wish


you all the best in your funding endeavours. n Ben Lobel


SmallBusiness.co.uk 5


‘The rationale is simple. The punters get equity or an attractive rate of interest, and businesses get their cash’


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