“We aren’t fat cat banks, we are finance for the people, from the people”
I have seen a lot of articles and comments lately referring to the equity crowdfunding market and the current ‘problems’ it has. Constant comments from ex-bankers/high net worth individuals are jeopardising the market and converting it to become more suitable for them.
There is no denying that the level of interest in equity crowdfunding has soared to new heights, with over a million UK investors exposed to crowdfunding and alternative finance. Of course this means that there are more ‘sophisticated’ investors and individuals with more money to invest and the industry needs to cater for them. This does not mean we should be cutting out the small investors, as the industry has been created off the back of these investments. These are investors that have believed in companies and have helped them get the investment they need. We cannot turn our back on the very people who have helped to put equity crowdfunding on the map.
It’s a real shame to see companies putting out propaganda that is so dismissive of these investors and the platforms who are hosting their pitches. They have been part of creating the space that has allowed others to join the market and position themselves. It would not be right for new companies and high net worth individuals to come in and ‘buy out’ the industry, creating the monopoly we see in every other market, and only catering for themselves, their peers and anyone else with enough money to join in. We would be taking away the hard work, commitment and faith of the SME’s and investors that built this amazing market.
Equity crowdfunding was created to support SME’s and to enable them to grow with a few of the online crowdfunding platforms actually starting up off the back of crowd investment. To change the market to only cater for well established businesses and high net worth investors, we cut out the very soul of the market, that it is targeted to the ‘crowd’ and inclusive of the everyday investor. Yes your capital is at risk, and you should only ever invest what you can afford to lose, that is the nature of the industry but, The London Stock Exchange is where you can invest large sums into less risky and more established businesses, not the crowdfunding market. ECF brings together individuals and shows the power of the people when they work together to create something great. This also helps to mitigate risk; more investor’s spreads the risk, rather than one or two investments funding the whole project. This takes pressure off everyone. Also the ability to invest small amounts allows investors to diversify their portfolio over a number of businesses which again mitigates risk.
Cutting out smaller businesses and entrepreneurs should not be an option in our market. Give them the shot that they deserve and allow entrepreneurs to pitch. I am not saying let’s get every pitch up and running because that would be ridiculous. The point that I am trying to get across is that I fear for the market. I fear that it is becoming the very thing we are supposedly offering an alternative to! A few large and intimidating individuals dominating the market with puppet strings in hand. At the end of the day we aren’t fat cat banks, we are finance for the people, from the people. Let’s continue to act that way!
Lee Nicolaou is the digital manager at BusinessAgents.com.