You’re an entrepreneur; you want to grow your business. Maybe you want to get rich. Applause, applause! So what next? Well, unless your minted uncle just died, you’re going to need investment, which is where most ambitious businesses are hitting the buffers just now. Banks aren’t lending and business angels may prove less than angelic, while venture capitalists want both arms and half a leg and you to work 24/7 to produce the desired return at speed.

Give serious consideration to crowd funding. What’s that, I hear you cry. “The wisdom of crowds” is an established idea, if not uniformly agreed. It translates into an investment opportunity by providing businesses with a route to lots of private investors who like your business, what you do, where you are going, and are ready to put small (and not so small) sums into your business.

The first commercial player in this market is Crowdcube. It provides a route for investors to put money into businesses without all the usual costs. Personally, I’d be twitchy asking “would you like to invest in my business?” But if the investment route was properly structured and could be done through the web, it’s different. Suddenly that turns into “my investment launch on Crowdcube”. That’s a whole different beast.

The process is decently straightforward. You create a pitch to be put on the Crowdcube website. The company vets it and, assuming approval, your pitch goes live as a dedicated page. If you’re legal, decent, honest and truthful you should be approved. At that point it becomes your responsibility to broaden the pitch. While the Crowdcube website gets lots of visitors who might want to invest in your business, it’s down to you to drive interest.

This can be friends and family to begin with – and often is – but use of the web and social media sites would open up the opportunity to many millions of other potential investors. Equally, you have your existing customer and commercial contacts database. Whether we’re talking about shop owners, hoteliers or private individuals, they have all bought your service already.

Therefore, they (hopefully) hold you in good esteem and could put money into your business. Unlike other investment routes, Crowdcube investors can start at £10, although the typical investment is £500 to £2,000. The Crowdcube process is fast – the pitch lasts for 90 days, no more. This is good for both parties: you know you have got your investment – or not – and can move on. By the way, investment carries no upfront charges to the investor, unlike other routes.

Sarvari Research Trust has raised an initial £5,000 for the development of a new variety of potato. It recruited a huge range of investors, including growers. David Shaw, director, says that crowd funding fills a valuable slot in the funding process.

Why should anyone give you more than pocket change? Answer that tough call with a real deal. The veg box in differing amounts is the obvious choice, but the offer should reflect your specialisation. Crowdcube recommends this.

So the potential is there. Your business proposition has to be high quality, with all the figures in place, all the plans spelt out in detail, not least what your exit plan is. That could be: “I want to double the turnover and treble the profit then sell.” It could be “I want to build the biggest fresh produce business in the south east and live off the revenue.”

It could be “I want to invest in top-quality facilities, focusing on premium clients and develop business throughout Europe.”

Next, the investor has to be able to see a return. For the older generation, worried about the shortfall in their pensions, that could well be a dividend. Alternatively, you might have a growth strategy which boosts the price of shares in the middle term, rather than paying short-term income. If your game plan is to become a listed plc, perhaps on the AIM, that typically promises longer-term but bigger rewards.

How much money you are asking for is critical. Unlike asking the bank for £50,000 and being told “sorry, we can’t lend you more than £20,000”, funding through Crowdcube has to be 100 per cent subscribed or the would-be investors get their money returned (that’s one of the virtues of the process – no deal, no risk for investors). You can, however, invest yourself to make up any shortfall. But unless you get this right, you can end up holding a short straw.

Because your pitch can include video footage, you should aim to use that facility – it’s the next best thing to actually meeting every potential investor. Note that professional investors (angels and venture capitalists) say that they ‘back the jockey, rather than the horse’, so you and your management team are a critical part of the proposition. You have all the other pitches being made as an example of what to do. This is definitely a case of copy what works.—