Why The Professional Chose Equity Crowdfunding

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Nick Moules
21st October 2014

We like to cover all kinds of crowdfunding in our blog, so here is a story that might give you food for thought if you’re looking at raising cash for your business through the crowd – a loan isn’t your only option…

John McLeod formed The Professional in 2013. It is a publication dedicated to the Leeds business scene and is an example of a throwback to a regional news agenda that was almost eradicated as pressure on traditional newspapers by the internet grew at the turn of the century. rebuildingsociety can see the potential of the business and has supported it since the start with advertising and editorial contributions.

John said: “The Professional was created as a result of me being on the enterprise scene in Leeds for the past 4 years. During that time I met some amazing business people with great stories to tell. There weren’t any regional business publications creating content in a feature led format, and I believed by telling these stories they could inspire others to go and achieve success also.

A year into our plan, we have now proven our model within Leeds and we are moving into phase 2. This includes expanding into other core UK cities, notably Manchester with a launch date of spring 2015. To achieve our vision of growth we acknowledged the need for funding and increased brand awareness. When reviewing our options for finance, crowd funding seemed an interesting way to both raise funds but also grow awareness of The Professional.

As this was a method of raising finance in which I had little practical experience I had some concerns on its viability for a business in the publishing sector and whether the crowd would be willing to invest in a start-up business, which by its very nature had no track record. Therefore I took advice from those in the industry and also others who had successfully received funding through the crowd. Following on from these conversations I felt confident crowd funding was the correct choice for us.

With regards to the equity crowd funding option, I was always happy to give up a percentage stake in my business if it meant it would accelerate our growth. My aim is for the business to be successful and if that meant sacrificing equity in the business then that is something I was willing to do. Not only that, but as investors own shares in my business, they then buy in to what we’re doing and where possible offer support to help us succeed.

There may come a time in the next 5 years where we will once again require funding to continue the growth of the business. If that should happen crowd funding would certainly be our first port of call. There are several other types of crowd funding such as debt over equity and it may be preferable at that time to acquire funding through a loan rather than offering more equity for sale.

My advice to anyone who is considering crowd funding is to do your research, speak to others both in the industry and who have been through the process. You then need to build a fantastic pitch, which clearly explains what you do and why you’re seeking funding at this stage. I’d also suggest looking for key investors, or friends and family to support the campaign before it goes live, as it will give you a much greater chance of success.”

There’s more information on The Professional’s pitch on Seedrs or you can hear more about crowdfunding in its many guises at the upcoming Deep Impact III conference in Sheffield.

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