There are few certain things in this life. However, over the centuries we have all agreed that a slow burn, mature approach to things will almost always produce a better quality product than a rapid, aggressive one. All things of quality take time to achieve. The mad rush to develop equity crowdfunding in the UK is in danger of proving this point.
The larger platforms have been formed on the hoof, using the services of relatively cheap staff (in City terms) from which you unfortunately get relatively useless service.
Take, just as an example, the recent demise of a beverage business on one of the UK’s largest platforms. This campaign closed before it ended, with only a fraction of the £1m pledged. Even the CEO of the business was forced to admit that it was not a well thought out campaign. There is nothing wrong with it as a company. So surely the platform must have seen the glaringly obvious but failed to advise on it. How is that possible?
Well, I think the platform did not understand what was wrong with the offer and this must surely be down to a lack of experience. It is part of a pattern that illustrates that in order to carry out effective equity crowdfunding in the medium and long term, there is no substitute for expertise.
This is the sort of approach I find adopted by Growthdeck. It is not about bubbles and fluff; it is about real expertise. It is not just important to get it right: it is vital.
In the days before banks stopped lending to SMEs, when you wanted a business loan you didn’t go to the nearest teller. You had to prepare a plan to present to a manager, who was always in my experience, a very hard man to convince. Love or hate him, the one thing a rigorous approach produces is a sound result.
It is similar to the situation with regards to valuations. Growthdeck has the expertise not just in Private Equity but also in specific market sectors, to make sound judgements, based on real life experience. Most of the other platforms do not have this ability. It shows when you look at their companies’ valuations.
The dangers in ignoring these shortcomings are all too clear to see. You do not build long term sustainable businesses by using mass media advertising and PR alone. The companies being funded need to be of a quality that will allow them to use the funding to grow. These companies need to be scrutinised by teams of experts who have a track record of reading the signs and picking winners.
Of course, in this asset class, there are always going to be failures – we can all accept that. Providing the failures are not simply a result of the business idea and team being substandard. In this case, the platforms are responsible for poor vetting and poor guidance.