Funding Tree to support small community-based businesses

Launched in August, the platform has already picked up nearly 2,000 investors in its first weeks of trading – and secured funding pledges of £600,000 for businesses raising money on the platform. They include a family-owned farm in the Yorkshire Dales, a Nottingham dance school and a community music venue in Northamptonshire.

Dillen Iyavoo, the chief executive and founder of Funding Tree, argues that the platform offers a different proposition to other crowdfunding ventures. Not only does it offer access to both equity and debt, but it also ensures that exciting community-based businesses have the same opportunity to raise finance as slicker, more corporate ventures run by serial fundraisers. In short, you don’t have to be a dotcom or the next big thing in order to raise money through Funding Tree.

Iyavoo said: “Any business that wants to raise money must establish its credibility and show that it offers investors an opportunity to earn good returns on their cash – and the businesses pitching for equity and debt on Funding Tree will stand or fall on their ability to do exactly that.

“Equally, though, we know that many of the established crowdfunding platforms increasingly gravitate towards digital or tech businesses, often from founders and directors who are regular users of such platforms. At Funding Tree, we want to encourage greater diversity so that young growth companies lead by entrepreneurs with a less conventional background get a fair shot, too.”

Funding Tree has already picked up three great examples of such businesses, all of which are now successfully raising money on the platform:

· Nottingham-based AEDA The Arts Academy is looking for £25,000 of debt finance in order to expand its business offering high-quality vocational arts education that is generally only available in London. “Banks simply don’t lend to businesses like us,” said Stuart McPherson, the business’s artistic director. “Funding Tree have given us a fantastic opportunity to tell our story, which has real investment appeal.”

· The Music Lounge in Northamptonshire is a venue offering space to musicians and is seeking £20,000 worth of equity from investors. “Trying to get funding for this type of business is a nightmare because the banks simply laugh you out of the door,” says Neil Stribblehill, the company’s founder. “The appeal of Funding Tree is that it offers a business like ours, which is alternative but potentially very profitable, the opportunity to pitch direct to investors.”

· Hazel Brow Farm, a working farm in the Yorkshire Dales, is looking for a loan of £10,000 to expand its visitor attractions as it looks to diversify its business. “We’re a relatively new business and we’ve already spent a great deal of money revamping the farm,” says boss Stephen Blazey. “We did talk to the banks but they didn’t make life easy for us – Funding Tree have given us a chance to set out our stall to a much wider audience.”

Dillen Iyavoo promised that The Funding Tree would operate in the true spirit of crowdfunding, which gives entrepreneurs and investors alike a chance to grab the opportunities that institutional investors and the ‘old boys’ network take for granted.

“This is a site that is open to any business that can prove its potential to investors,” Iyavoo said. “Crowdfunding can be a way to democratise fund-raising so that entrepreneurs are able to fulfil their potential – we want to help young, high-growth businesses do that whether they’re based in rural communities or city centres. A working farm with the prospect of solid but steady returns should have the same access to finance as a tech start-up offering the potential for hockey-stick growth. But until now, this hasn’t happened.”

Launched in August, the FCA-regulated Funding Tree is the first major crowdfunding platform to enable companies to raise capital through either equity or loans. It is now putting fund-raising within the reach of firms of all shapes and sizes – both start-ups and growing businesses.