Local entrepreneurs are getting together in a bid to promote “crowdfunding” as an alternative source of business finance.
The entrepreneurs, who include Barry James of Sheffield company AngelRevolutions, reckon crowdfunding – where people provide small sums to support a business idea – could be the answer to the lack of bank funding for small firms and start-ups.
He argues that, despite Government initiatives, banks are still reluctant to re-introduce ‘normal’ lending for small firms and he is angry with the Financial Services Authority (FSA), for apparently discouraging potential crowdfunding investors.
“We really are fed-up with the banks and equally fed up with the FSA at the moment. One might be forgiven for thinking they exist to protect the banks position, not to regulate them.”
Mr James says the FSA appears to be deliberately trying to extinguish a glimmer of hope for small firms by confusing “crowdfunding” with “crowdfinancing.”
He says crowdfunding typically involves loans of individual sums of £20 to £50 for projects worth a few hundred to a few thousand pounds, while crowdfinancing involves sums running into thousands of pounds which are handed over in return for shares.
Mr James and fellow entrepreneurs have banded together to organise what they describe as a “Fire-Starter” event tomorrow as part of the Fringe at MADE: The Entrepreneur Festival - and, they have persuaded Barclays Bank to host the event.
“Barclays has been very helpful,” says Mr James. “I assume they have got broad shoulders and are keen to encourage a debate about the future of crowdfunding.
“The dual aim of the event is to raise awareness of and access to crowdfunding for UK entrepreneurs – including the 3,000 attending the festival - and to oppose the FSAs attempts to restrict all forms of crowdfunding to just ‘sophisticated investors’ – however safe or low the stakes.”
Organisers say they have invited the FSA to take part in the event, but have yet to receive a reply.
For more information about the event, visit: AngelPages.biz/4Crowdfunding.