Speaker Ian Mitchelmore

Ian Mitchelmore of the Scottish Investment Bank addressed the club on the subject of crowd funding.   This is an increasingly popular way of raising business finance in the wake of the financial crisis, which led to a dramatic reduction in traditional bank lending.

Crowd funding is not a new phenomenon – its roots can be traced back to the 1700’s when the Irish Loan Fund was set up to lend to low income families, however, the term “Crowd Funding” was first used in 2006. Crowd funding can take many forms – equity, loans, donations and subscriptions, and is largely internet - based via a number of specialist platforms, such as Crowd Cube, Seedrs, ShareIn, and Squareknot.  Funding participants may receive tangible benefits e.g. share dividends, loan interest, or discounts on purchases, or may contribute for purely philanthropic reasons. The Fraserburgh brewers, Brewdog, recently raised £7m through crowd funding for business expansion, and contributors are rewarded by discounts in the company’s pubs.

Like any form of investment, crowd funding is not without risk – many of the business ventures are start-ups and early stage businesses with limited management experience.  Much of the crowd funding market is also unregulated.

This was a very interesting presentation highlighting new and alternative ways of raising business finance.

Thanks to Tom Pettigrew for this summary.