The MoneyLab Blog

Michael McDowell, Sapphire Capital

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Getting ready for the crowd!

Posted by Michael McDowell, Sapphire Capital on 03-May-2019 13:14:42


Equity crowdfunding is a relatively new way for businesses to raise investment and that is why we are just now getting a clear picture as to what types of companies this finance raising channel is most suited. 

Did you know that leading platforms such as Crowdcube and Seedrs accept only c.5% of the applicant companies on their platforms?  The low level of acceptance indicates that there are specific business characteristics required to avail of P2P investment.  For example, platforms typically expect applicant companies to be revenue generating and potential initial investors already identified.  So if you are an entrepreneur seeking money for your big idea, then chances are you won't be able to raise finance via platforms, unless you have a team with a track record of glittering exits, or Elon Musk endorsing you.

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Topics: Crowdfunding

Structuring your pitch deck - how to get it right?

Posted by Michael McDowell, Sapphire Capital on 10-Sep-2018 13:01:01

The first contact many investors will have with your business is an introductory email with a pitch deck. However, too often a pitch deck is just:

  • a high-level business description;
  • a long exploration of an industry sector;
  • unsubstantiated financials; and
  • a biography of the founder.
I often hear entrepreneurs say that the branding and production quality of the pitch deck doesn’t matter. I don’t agree with this. Pitch quality counts as it infers how well you can promote both the company and the product. It’s true however that some investors will look beyond branding and production quality, but in my experience it’s a risk not worth taking. 
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Topics: Crowdfunding

Getting your business ready for the crowdfunding and angel platform stage.

Posted by Michael McDowell, Sapphire Capital on 16-Nov-2017 15:13:15


For some time the team at Sapphire have championed the use of crowdfunding and angel investment platforms. They continue to provide businesses with a stage to present their investment opportunity and the administrative systems to accept investment in an orderly manner. This has been achieved by the use of new technology and design of efficient business processes.

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Topics: Crowdfunding

How the tax man rewards you for being a crowdfunder

Posted by Michael McDowell, Sapphire Capital on 15-May-2017 11:37:35

When Airpos
board of directors decided to launch a round of fundraising they wanted to ensure it was open to as wide a community of investors as possible.  They wanted to avoid the traditional roadshow, photocopied brochures and hard sell over coffee.  They identified the efficiencies of equity crowdfunding platforms and particularly Crowdcube as the best way to raise money.  They also wanted to ensure investors receive all benefits possible from investing, including those offered from HMRC.  

AirPOS is the type of company the UK Government likes to encourage- it’s an innovative technology company that is growing quickly, employing staff that will contribute significant tax.  
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Topics: Crowdfunding

Equity crowdfunding - the new reality

Posted by Michael McDowell, Sapphire Capital on 22-Mar-2017 15:02:58


As the leading crowdfunding platforms grow to a new level of maturity, businesses increasingly view this as a way of raising investment. They also appreciate the opportunity to use crowdfunding to raise the businesses’ profile, attract customers, professional partners and prepare for future fund raising rounds. The challenge is to get listed on a platform but there is some transparency in what they are looking for and what they expect from a business who wants to list. It’s also clear what a company has to do to get ready:


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Topics: Crowdfunding

Grow Advisors Seminar Series 2016 - Essential Digital Marketplaces

Posted by Michael McDowell, Sapphire Capital on 02-Jun-2016 14:51:24

Essential Online Marketplaces - Lending & Equity Investment

London ,  29th June, 2016

Since before the global financial crisis, a new breed of financial services has been taking hold in markets as far afield as the US and China. Today, the UK itself is a world leader in equity crowdfunding and online lending platforms.

It is estimated that close to half of all investment in UK fintech relates to platform based financial services.

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Topics: Crowdfunding, Alternative Investments, private equity, seminar, fund management, platforms, fintech, p2plending, wealth management

Highlights of the 2016 FCA consultation for Peer to Peer lending

Posted by Michael McDowell, Sapphire Capital on 04-Feb-2016 17:45:50

The fastest growing and most visible area of alternative finance is Peer to Peer (P2P) lending. This was born back in 2006 with ZOPA who facilitate loans between investors and members of the public. 

 ZOPA proved to be very successful and following the banking crisis of 2008 the number and markets P2P lending services has grown quickly. There are now over 100 platforms in the UK offering investment and borrowing opportunities for individuals, businesses, property development and investment and invoice factoring.

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Topics: Crowdfunding

UK property crowdfunding - harnessing the power of the crowd

Posted by Michael McDowell, Sapphire Capital on 05-Dec-2014 11:18:55

Over the past few years the growth of crowdfunding has been remarkable.  It started as a reaction to a decline in bank lending and traditional sources of finance following the credit crunch of 2008.  Since then, we have seen Crowdcube raise over £46m from 115,000 members for start up businesses and Peer to Peer lending sites like Funding Circle facilitate over £100m of loans for small and medium sized businesses. The sector that has been slower to approach these alternative sources of finance has been real estate.

The ability to source capital for development projects or commercial property investments outside major cities such as central London continues to be very difficult. This is despite the genuine opportunity of excellent financial returns.

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Topics: Crowdfunding

What is crowdfunding? A refresher for 2014

Posted by Michael McDowell, Sapphire Capital on 18-Jun-2014 19:19:28

Over the past 18 months, crowdfunding has entered the vocabulary of the business community, but it can mean very different things to different people. There are currently circa 87 crowdfunding platforms operating in the UK.  They are offering investors the opportunity to lend to business, buy equity in start ups and growing businesses, support projects for rewards or buy a new product which is still in development.  This has led to a lot of confusion in the market place as the definition of what exactly crowdfunding is has become very broad.

Usually crowdfunding platforms are classified as being loan-based (P2P lending), investment-based or a rewards based model.  These classifications have been adopted by the FCA in their recent policy statement (PS14/4) but what do they mean?

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Topics: Crowdfunding

Time to move your business forward with an EIS?

Posted by Michael McDowell, Sapphire Capital on 22-May-2014 14:38:30

The decision to move your business to the next level is rarely taken in isolation by a management team. Outside influences often drive that decision, whether it is due to the demands of customers, changes in the market, a reduction in cash flow, competitor activity or shareholder demands.  If funds aren't available or borrowing is not possible, then an EIS is the most obvious next step.

The first step in the EIS process is to liaise closely with your accountant and/or lawyer to help you to ensure that you approach the EIS in a practical and legal way (Sapphire can advise on how best to approach this and guide you through the process - see our services page here).  Once these administrative arrangements have been put in place the real challenge begins, being the fund raising.

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Topics: EIS

Coffee shops: fuelling investors, entrepreneurs and UK crowdfunding

Posted by Michael McDowell, Sapphire Capital on 06-Apr-2014 16:35:00

In the 17th Century merchants would meet at Jonathan’s coffee house in Exchange Alley London and discuss business, trade and buy/sell shares in their various enterprises. Traders of higher standing did the same but within the gentlemen’s clubs of Pall Mall. Following the chaos caused by the South Sea Bubble they formalised the trading and established the London Stock exchange. Things surprisingly haven’t moved that far from Jonathan’s coffee shop. Now it’s Café Nero, Starbucks and other favourite coffee shops where business plans are reviewed and deals are struck. 

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Top 10 ways to get your business listed on a UK crowdfunding platform

Posted by Michael McDowell, Sapphire Capital on 14-Mar-2014 16:12:00

From an investor's perspective it is reassuring to know that the leading UK equity crowdfunding platforms list less than 10% of the businesses that approach them.  It's therefore important for entrepreneurs to understand their selection criteria.  There isn't a simple prescriptive list but here are some key principals that should be followed.  From our experience, the following are the top 10:

1. It's all about you.

It's you who will deliver on the investment.  It can be a world class product or service but if you can't deliver, no one will profit. You therefore have to convince the platform that you have the skills, experience and track record to create a success using the funds invested.  You also have to convince the platform that you will be able to engage and connect with potential investors as well as being easy to work with and can be a good leader.  

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Topics: Crowdfunding

FCA new crowdfunding regulations due in 6 weeks! The 4 key changes

Posted by Michael McDowell, Sapphire Capital on 05-Mar-2014 00:04:00

The FCA will soon announce their regulations for  equity crowd funding, peer to peer lending and the electronic marketing of securities and investments.  What changes can the market expect and how will it impact existing platforms and new entrants?

The  FCA  proposes  the  following  four key changes: 

  1. To  limit  the  direct  offer  financial  promotion  of  unlisted  shares  or  debt  securities  (including  websites)  by   firms  to  one  or  more  of  the  following  types  of  retail  client:     
    • Those  who  are  self  certified  or  self  certify  as  sophisticated investors.
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Top 10 crowdfunding fundamentals

Posted by Michael McDowell, Sapphire Capital on 17-Feb-2014 21:00:00

These are the ten most important considerations before launching a crowdfunding project.  The golden rule is always to take plenty of advice and we are happy to help. 

1.Why does your business need the money?

Crowdfunding takes two main forms, peer-to-peer lending and equity crowdfunding.  If a business requires funds for a specific project, to cover a short term cash flow issue or to make a capital investment in equipment or property, then a lending model is usually adopted.  If funds are required for both capital and revenue expenditure then equity crowdfunding may be more appropriate.

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Electronic marketing of securities & investments – aka crowdfunding

Posted by Michael McDowell, Sapphire Capital on 11-Jan-2014 17:40:00

When you look closely at crowdfunding, you will quickly realise that it should be defined as the online marketing and management of securities and investments. It’s widely perceived as a fund raising technique for start ups, social enterprise and the cultural sector.  In reality these sectors have taken a lead and now everyone in the financial services sector and their clients are set to follow.

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Crowdfunding: The FCA needs to hear from you!

Posted by Michael McDowell, Sapphire Capital on 07-Dec-2013 19:31:00

The UK Crowd Funding Association (UKCFA) have launched a PlaceSpeak topic to encourage their members and others with an interest in Crowdfunding to voice their opinions and join the debate on the future of Crowdfunding in the UK.

Crowdfunding is a recent development in the financial services sector. It is the practice of businesses borrowing money or selling equity to a large number of small investors. The two main models are the sale of equity and peer to peer lending.   The FCA views the offering of other debt securities such as debentures as an equity investment. This is due to the perceived level of risk despite the fact that it is a form of peer to peer lending. Others in the design, technology, arts and charitable sectors have adopted the sponsorship/donation or reward model.

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Topics: Crowdfunding

Is it time for Crowdfunding to grow up?

Posted by Michael McDowell, Sapphire Capital on 07-Dec-2013 19:21:00

With the success of Funding Circle, record breaking months of money raising with Crowdcube and Seedrs and new platforms launching every week, a few questions remain unanswered.  Why are most Enterprise Investment Schemes ("EIS") still being promoted with a scruffy PDF and a long trudge through IFA firms, hotel lobbys and coffees shops? Why is it that it appears to be only the more risky startups and not the established profitable businesses, that are looking to expand via crowdfunding? And of course, the question that I am constantly thinking about, should the term crowdfunding be permanently dropped from the business community and replaced by the more appropriate description of what really is happening i.e. crowdinvesting?

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Topics: Crowdfunding, EIS Schemes, investing, seedrs, crowdcube, high net worth, sophisticated investor, angel networks, angelsden

Reducing the fear of regulation and fraud from equity crowdfunding

Posted by Michael McDowell, Sapphire Capital on 11-Sep-2013 16:01:00

There are two big fears when it comes to equity crowdfunding.  Platforms fear regulation and everyone fears fraud.  Both unfortunately are likely, but signs are that these fears will be reduced by a collaborative approach from the FCA and the crowdfunding platforms themselves.

The Sunday Times recently reported that crowdfunding, will face regulation by next April 2014.? The FCA spokesperson said: “We believe most crowdfunding should be targeted at investors who know how to value a start-up business, and who appreciate the risks involved and that they could lose all of their money.  We want it to be clear that investors in the majority of crowdfunds have little or no protection if the business or project fails.”

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Topics: Crowdfunding

Peer to Peer Lending or Equity Crowdfunding - which is right for you?

Posted by Michael McDowell, Sapphire Capital on 01-Aug-2013 21:33:00

As the number of crowdfunding platforms and providers continues to grow in the UK the key question is - which one is right for you?

It is clear that crowdfunding is now becoming very specialised - with different crowdfunding websites focusing on niche areas and as a result we are seeing a process of differentiation within this business sector.  In this blog I will attempt to explore in more detail two of the most important of these sectors for the entrepreneur - being peer to peer lending and equity crowdfunding.

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Topics: EIS, investing, seedrs, crowdcube, assob, uk, peer to peer lending, SEIS

Peer to Peer Lending Comes to the Rescue of Commercial Property

Posted by Michael McDowell, Sapphire Capital on 03-Jul-2013 22:19:00

The property professionals’ journal – Estates Gazette – had one of the most interesting editorial comment pages that I’ve seen for a long time on the 8th June.

“Suddenly, it seems, borrowing has ceased to be a problem.  New lenders are tripping over each other to offer terms, and there could be a lending surplus within 12 months.  But, as with any smoke signal to emerge from a financial institution, pay close attention to the small print.”

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Topics: Crowdfunding, peer to peer lending, UK REITs, Property Investment Funds, commercial property sector, Relendex, Funding Circle