Wednesday, 20 January 2016
A new hope for ECF
For Equity Crowdfunding there is light at the end of the tunnel
Since 2011, when Crowdcube launched the first on line ECf platform in the UK, hundreds of businesses have tried to raise money using this channel. Many have succeeded but very very few have come close to meeting the projections used by the platforms to promote the pitches. This has to change.
We blame the platforms - far and square. We know from talking to entrepreneurs that the larger platforms push businesses to escalate their financials. Sexing up the dossier in other words. We have shown 50 or 60 examples of this on this blog - there are many more waiting in the wings.
This is just crazy business practise. Over trading in an early stage business is one of the most common causes of failure - so actively encouraging it shows strong suicidal tendencies.
In a few days we are launching ECF Solutions - a bespoke business service for companies thinking about using ECF to raise funds. We aim to promote only businesses we feel have a good chance of raising their money and going on to deliver some return for the investors. If we dont back winners, we wont get paid!
Failure is all part of the start up game - many would claim that you learn far more from it than success. However stupidity should be kept to a minimum. Advancing claims about a business that simply can never come true is plain stupid - it doesn't help anyone in the long run. As the main platforms seem unable or unwilling to help prevent this and the investors are still being dazzled by the promise of the next FB, its up to some sensible well seasoned business heads to sort out the mess.
Launch day has been brought forward to tomorrow.