Small Talk: Crowdfunding can flourish but it still needs a watchdog

Raise your glasses to BrewDog, the Scottish brewery company in the middle of a £4m growth capital campaign. It is raising the money from equity investors through a private share sale and looks likely to hit its target with no difficulties at all – £1m came in on the first day of the share issue.

BrewDog's success partly reflects a clever marketing campaign that has sought to capitalise on the cachet it has with customers who admire an independent business in an industry mostly populated by large brands with very similar products. As well as a stake in what has been a fast-growing company, the "Equity for Punks" fundraising offers investors discounts on BrewDog products.

Nevertheless, this is a project that is only possible thanks to the power of the internet, which gives the company access to millions of potential investors through a single portal. The BrewDog campaign is part of the wider crowdfunding movement, which continues to go from strength to strength in the UK (and in many other countries).

So much so that crowdfunding is rapidly approaching an important crossroads. On the one hand, we are starting to see some key figures in the sector pushing to see it get the same sort of support from policymakers as other initiatives that help growing businesses raise money. There is a growing clamour, for example, for people to be allowed to hold crowdfunding investments within their tax-free individual savings accounts.

On the other, we are also beginning to see a bit of a backlash. There are those who believe that since the crowdfunding sector is unregulated, some sort of scandal is just around the corner. They point to a warning from the Financial Services Authority last year that crowdfunding is an activity really only suitable for sophisticated investors. Where then do we go from here? The first point to make is that there is clearly a demand from investors for crowdfunding.

We know there is a demand for crowdfunding from small businesses too. While bank debt remains difficult for many growing companies to access, equity funding is even tougher to come by. The banks have mostly withdrawn from this type of finance and the private equity and venture capital sectors have never really filled the hole.

If investors and investees think crowdfunding is the way to go, we should do our best to ensure nothing gets in the way. That means being careful not to erect unnecessary obstacles to the sector's development, but also ensuring that investors are well protected.

In practice, it makes sense for the Financial Conduct Authority, which has replaced the FSA, to be given powers to police the crowdfunding sector. Regulation would deter the sort of fraudsters who tend to be attracted to growth businesses of this type.

With the sector put on firmer footing by regulation, it would become much easier for policymakers to support it with tax breaks. There is no other reason why shares in companies that have raised money through crowdfunding should not be eligible Isa holdings.

There's no doubt crowdfunding is here to stay. In time, fundraisings such as the BrewDog share issue will become commonplace. But if the sector is to fulfil its potential, it needs closer attention from regulators and government.

Platform takes Aim for $50m fundraiser

Plus500, the latest in a long line of successful ventures to come out of Israel's booming technology sector, will today unveil plans for a listing on the Alternative Investment Market (Aim).

The business, which runs an online trading platform for investors in contracts for difference (CFDs), aims to raise as much as $50m (£32.7m), which would be one of the largest IPOs on Aim this year.

CFDs are instruments that offer investors exposure to movements in an underlying asset – Plus500's platform offers CFDs linked to around 1,700 securities – without requiring them to own the asset itself.

Like conventional derivatives, they feature gearing – a movement in the value of the underlying asset produces greater corresponding gains or losses for the CFD holder – and have become increasingly popular over the past decade.

Plus500 wants the money to step up its marketing efforts in an industry where competition is fierce, as well as to expand into new territories.

It already has 58,000 customers in more than 50 countries around the world, and made a profit before tax of $23m on sales of $56m during 2012.

Small Business Man of the Week: Nicholas Green, founder, printed.com

We launched printed.com in October 2011 with just a couple of us working out of a small office – I had a background in both print and online advertising, and although people were talking about print negatively, I knew that if you could combine those two worlds, it was possible to build a successful business.

"The business has grown by 100 per cent a year in each of its two years of trading so far and I'd like to be doing £7m to £8m of annual sales by February next year. We've now got 20 of us working in our London office, plus another 30 or so at our print facility in Newcastle.

"We started out offering products such as business cards but we've just kept expanding the range as we've had new ideas.

"We're always working on ways to differentiate ourselves from other businesses because we're aware that we're not the only ones doing this. For example, we've got a rewards programme where you can earn points with British Airways for buying our products.

"We're already expanding internationally – we've found a partner for the US and we're looking at continental Europe too.

"Long live print – we're providing a service people seem to want."

Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
art
News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features staging of a playground gun massacre
Travel
travel
PROMOTED VIDEO
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
News
i100This Instagram photo does not prove Russian army is in Ukraine
News
Morrissey pictured in 2013
people
Sport
sportVan Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Life and Style
Martha Stewart wrote an opinion column for Time magazine this week titled “Why I Love My Drone”
lifeLifestyle guru Martha Stewart reveals she has flying robot... to take photos of her farm
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
filmReview: Sometimes the immersive experience was so good it blurred the line between fiction and reality
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices