(Crowd)funding Your Start-up Social Enterprise
Note: This post was originally published at Social Enterprise Live.
A profusion of crowd-funding platforms has emerged in the last few years, from the peer-to-peer lending site Zopa to microfinance giants Kiva. Theresa Burton and Michael Norton have stepped into the fray by setting up Buzzbnk – a crowd-funding platform for start-up social entrepreneurs.
So will crowd-funding platforms be the panacea for start-up funding? Matt Black caught up with Theresa to find out more.
Running both a start-up and an investment platform, Theresa has some fantastic insights into how start-ups can raise finance. So, is crowd-funding the answer to start-ups' investment prayers? Only if they're willing to put the leg work in. Buzzbnk provides the platform, and some excellent tools and guidance, but the onus is with the social entrepreneur. Social entrepreneurs need to be pro-active, focused and determined to raise the finance.
“Crowd-funding is fund raising,” says Theresa. “Entrepreneurs need to understand who their targets are, and build their own crowd.”
What Buzzbnk does provide is access to unsecured, cheap finance that many start-up social entrepreneurs struggle to come by.
“One of the reasons there are not enough investment-ready organisations out there is there is not enough high-risk capital for early stage businesses.” More early stage capital, Theresa argues, will lead to more investible social businesses for the larger funds.
Crucial to any start-up is the team. Theresa has a strong track record in IT, while her business partner, Michael Norton, is a serial social entrepreneur and fundraiser. “Investors in early stage businesses invest in the team and the idea,” Theresa says. If you don’t have the expertise, get it.
As everyone knows, Theresa says, it is impossible to accurately project revenues of a start-up. What is in your control are the business's costs. “You will need to adapt to grow your revenue, but we delivered our first milestone to our investors on budget." This was key to managing the investors and opening more pockets of finance.