Thursday, 9 June 2011

So You Want to be a Dragon?

So you would like to be like the Dragon's Den team on TV and have your own portfolio of investments in private small businesses?

Good. Because now everyone has a chance to be a real Dragon. This month's IOD Director Magazine features an article about an innovative and exciting new way for entrepreneur's to attract inward investment and for small investors to get a piece of the action. Set against the backdrop of banks unwilling to lend to small businesses, despite what was being said yesterday, who have solid orders and decent business plans because they have no collateral assets upon which to secure the loans, you now have the chance to make your own decisions based on these facts.

Enter, the new website and private investor club who specialise in investing in small businesses with big ideas. It's just like Dragon's Den in terms of the range of business types and what people are asking for and there is something for everyone. Rather than behaving like some arrogant tosspot for the TV's sake, you can either use your own judgement or just gamble with a minimum investment of just £50 in a single company.

Crowdcube is free to join but read the legal stuff at the beginning diligently and, just like the TV show, none of this amateur investing is governed by the FSA. So you are investing on your own judgement and you can lose the lot with no comebacks. This is real world stuff and not for the fainthearted.

Crowdcube acts pretty much like an angel network but investors can speculate on a small level and spread their money across several interesting ideas if they wish. There is a forum for chatting over ideas and there is an easy feel to the whole thing that makes you feel as if you are anything like small minded or have to be 'Bertie Big Bollocks' in order to invest in non quoted companies. It also means that you are part of small groups of investors in new ideas which are the lifeblood of the UK economy when Private Equity trade in buying and selling companies only and banks are more interested in trading debt. Without investment in simple ideas then Britain will not continue to replenish the 97% of all companies that make up this economy.

What frustrates about the stories at Crowdcube, such as Bubble & Balm who are seeking to raise £75,000, is that banks won't lend to the company because the owner, Sue Acton, has been wise enough to outsource manufacture and so has little or no tangible assets in the business. Banks shun this because there is no 'security' despite the fact the company has contracts with the likes of Waitrose and a niche corner of the market that could grow via the internet globally.
In the same issue of Director, a letter pleads in favour of bankers making £8m bonus and that we should applaud them for wealth creation but it is businesses like Bubble & Balm who make up the vast majority of the companies that trade and pay taxes in this country. Innovation is deemed not to be ideas like Sue Acton's but ideas to buy and sell companies like Boots to create wealth and we have to break that mentality in this country or to just believe it is about creating technology based companies.

Trade is crucial to our future. I think Crowdcube gives us the opportunity to be investors in the country's future and to build a portfolio as good as those who have the TV image for far less outlay.

Go onto the website, talk to the founder, Darren Westlake and see what you think. But remember, as with any investment, do your homework diligently. Bubble & Balm is one thing, snake oil is something quite different.

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