Member Article

Hybrid crowdfunders emerge from North East, hungry for growth

A firm of County Durham financial technology specialists have launched a unique take on the crowdfunding concept from the region.

GrowthFunders is the revolutionary crowdfunding and equity co-investment vehicle developed by Aycliffe Business Park-based Growth Capital Ventures, and has been described as a precursor to flotation for fledgling business.

The digitally-lead platform builds on existing crowdfunding models by bringing professional investors and funds to initially anchor investments, which are then opened up to the public or “crowd”.

Whereas other crowdfunding platforms go straight to the crowd who typically generate small individual amounts, GrowthFunders use syndication to bring established lead sponsors or venture capitalists on board each project.

CEO Norman Peterson explained: “The model is great for investors as it gives them pre-approval by a professional organisation and also opens up their match-funding requirements to a wider pool of other investors.

“The entrepreneurs and businesses can also get validation from the crowd on their proposals and so they can gauge appetite for their product or service.”

Around 45 companies are in GrowthFunders’ current pipeline of projects. Norman says a number of North East businesses are lining up to raise capital via GrowthFunders, including one very high profile Newcastle outfit looking to achieve over £1 million.

80% off GrowthFunders activity happens off line - and this includes the work to match entrepreneurs with relevant investors.

The team behind GrowthFunders also work to project manage the deal before it goes live to potential investors, providing tools to guide the fundraising process.

Norman added: “We provide connection between the entrepreneurs who are looking to raise money; the investors; the funds and members of the public.

“Each investor have their own requirements and each fund has its marketplace. We make sure that investment criterias match up with the projects we’re supporting.

“We then work with the entrepreneurs to shape their proposition and aim it at certain fund requirements. It’s about getting a good alignment for both sides.”

Norman and his team are currently working to get Financial Conduct Authority approval to be able to push the business into European markets.

GrowthFunders receive a 5% success fee on funds raised. If the fund raising misses its target, the firm receive nothing.

The firm have studied international best practice in the crowdfunding field and used their findings to build investor protection as well as tri-monthly reporting requirements for businesses to update investors on their progess.

The team are proud of their regional base, and Norman added: “Most of this sector is concentrated in London and GrowthFunders represents a really unique product that has its roots firmly in the North East.”

To take a look at the GrowthFunders platform, visit their site.

This was posted in Bdaily's Members' News section by Tom Keighley .