This blog is an attempt to shed some light on the real face of the UK ECF market. Its purpose is to expose the model currently being used in order for the Government and the FCA to see that it simply doesnt work. There is little point in developing alternative funding for businesses that cannot be sustained. It is our hope that someone will read this and take some notice of the facts it reveals. This might then lead to changes that could allow this form financing for our vital SME sector to flourish. The alternative, as you will see from reading the posts, does not bear thinking about.
Over the past 4 years, since ECF started in the UK, this form of business finance has grown rapidly; unfortunately far quicker than the funded companies.
The data we have, which we will use over a series of posts here, shows the way that ECF sites have been manipulating information given to potential investors, ignoring facts that dont support the pitches and exaggerating the up sides. Driven by Government's misuse of EIS and SEIS tax rebate schemes, where investors can claim back up to 50% of this investment, this is an issue that should worry every taxpayer. This wasted money is currently in the region of £40m and growing exponentially.
Having tried to take this story to the press, we have become convinced that they along with the Government and bodies like the UKCFA have such vested interests in maintaining this growth that the truth will never out. Well now it will.