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Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Social Business Wales New
Start
Community Finance Session
Carly Mc Creesh
Project Manager
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Why are you here??
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
• Non repayable finance – Grants, donation based
fundraising,
• Repayable Finance – Equity, Debt finance, social
investment, peer to peer lending, angel investors,
friends and family
• Sales of goods and services- cash sales, credit,
contracts
• Blended finance
What are the most common ways of raising
finance for start up social businesses
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
• Have you heard of Captain Tom? £32.8m!
● #MasksfornhsHeroes > £2.2m
● Crowdfunder’s #PayItForward scheme > £7m
○ £3.8m raised by 1000 UK businesses from 77,000 supporters
○ £3.5m raised by community and charity projects
100% free for social businesses during the crisis
Other platforms – kickstarter, justgiving, gofundme, iFundWomen
Is it now a good time to crowdfund??
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
• Finance for some or all of your start up costs – this is reducing
• Adapting in times of crisis funding - where business is not as usual
Different types of crowdfunding:
Reward based * Donation based * Equity based * Debt based
Crowdfunding and start ups
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Lets see what others are up to across Wales
and the UK
Tarts
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
• Positive way to test the market – validates your business plans
• Build up supporter/customer base – opens or retains the
dialogue with customer base during this time
• Positive PR exposure – awareness
• Less risky – not giving up equity
• Funders and commissioners like it- shows credibility
Pros of Crowdfunding
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Cons of Crowdfunding
• Timeconsuming – before and after
• Reward based crowdfunding – often potential little
financial pay off and need to send merchandise
• Current climate in some areas there is investor fatigue –
e.g. Flood emergency funding, C19 response
crowdfunding
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Key Hints and Tips for a successful crowdfunding
appeal • Build your team
• Do your research
• Choose the right platform
• Know your target audience
• Create marketing materials and a marketing strategy
• Set goals
• Make the reward worthwhile
• Communicate openly
• Follow through on your promises
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Why it works:
Show and tell – you can see
the cooking lessons and
community eating
Beneficiary stories
Founder drives the video –
people trust and invest in
people
https://www.crowdfunder.co.uk/made-in-hackney-1
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Community Shares
• Must be a society to be able to do this
• Way to raise finance from a community or community of interest.
• 1 member 1 vote – with equal votings rights
• Democratic control
• Withdrawable non transferrable shares
• Protects against personal gain – can pay a small interest payment but classed as a reward
• Prevalent in community pub, energy, broadband and community shop sector
• Trends – sports – community broadband – food distribution
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Pros and Cons of Community Shares for
Start UpsPros Cons
Low risk equity- patient capital Classified as debt on your balance sheet
Democratic control and more buy in and engagement
with members – more formalised relationship with the
investors- more likely to volunteer and be customers
Time consuming and ongoing administration
Embed membership in the decision making of the
organisation
Engagement with members – misconception or not??
Attracts higher investment with the member
Tax relief possible for investors
Creates a pool of individuals to foster innovation and
future investors in new services and products
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Roadmap to community shares:
• Engaging community/crowd
• Developing the team
• Drafting the share offer document
• Promoting the offer
• Launching your service
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Grant Funding
• Wales Coronavirus Resilience Fund- Community Foundation Wales
• National Lottery Community Fund:
❖Awards for all
❖People and places
❖Coastal communities Fund
❖Arts council
❖Sports wales
❖Heritage lottery funding
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Cont…. Grant Funding
• Voluntary Services Emergency Fund
• Active Inclusion Fund
• Social Investment Cymru
• Comic Relief Community Fund in Wales
• Third sector resilience fund for Wales
• Landfill Disposals Tax Communities Scheme
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Pros and cons for grant funding
Pros Cons
Allows you to trial and test your business idea with
minimal risk
Can restrict delivery and flexibility to ensure that
funders requirements are met
Gives some financial reassurance and can cover core
start up costs
Potential for claw back if you do not deliver
Allows you to purchase the necessary capital start
up
Doesn’t always fit well with commercial/business
models
Exposure as part of a funders portfolio Can create a grant dependency culture
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Things to consider when looking at which finance
option is right for you and your business
• What you need the money for
• Future aspirations for raising capital
• Timings – how quick do you need money
• Business model and operations
• How much money you need
• Your end beneficiaries/product
Busnes Cymdeithasol Cymru
Social Business Wales/busnescymru.llyw.cymru/busnescymdeithasol /businesswales.gov.wales/socialbusinesswales
Any Questions???