Major New Funding Guide For SMEs & Start-ups

Malcolm Evans is a corporate finance activist, researcher and businessman. He has just published free online The Essential Guide to Earlier Stage Corporate Finance, which contains many radical insights into the funding process. Here he describes the experiences which have led to the founding of a new organisation and movement to promote smoother capital flows:

I've long been appalled at some of the ways in which corporate finance operates – or doesn't operate in the UK – and so I have decided to do something about it.

Funding Enterprise will improve the corporate finance knowledge of business builders and it will help stimulate choice and capacity in the funding markets.

We've just published our first free quide, The Essential Guide to Earlier Stage Corporate Finance.

These days we cannot open our email inboxes without being bombarded with offers and information about social media marketing, seo, training and coaching, marketing and all manner of other supports.

Yet the world of corporate finance seems to be a distant and unknown country. This is remarkable given that the essence of capitalism is the combination of money and opportunity in the hope of profits.

The greatest lack of knowledge and support is amongst the sector which probably needs it most, that of SMEs and start-ups. Larger and established operations usually have access to a broader support network when it comes to corporate finance.

I see these problems regularly in my working life. I work out of Innospace, the busy incubator at Manchester Metropolitan University.

Over the last year, a clutch of fledgling companies have moved on to the level at which they have required external finance. Their founders are brilliant in functions such as marketing, IT and team building. But their grasp of corporate finance is generally sketchy at best. It is simply not something that our general business culture emphasises. We have become overly seduced by the trendy rhetoric of "entrepreneurship" and "high growth" without looking closely enough at the capital implications.

On the other side of the equation, the funding providers, I have seen things sometimes going awfully wrong. Too often ignorance and lack of planning, perhaps driven on by greed, produces funding packages which are both insufficient for the business potential and also utterly demotivating for the project promoters.

I've also seen finance savvy entrepreneurs and superbly sector-aware venture capitalists combine in acts of breathtaking value-creation. But these are sadly the exception to the funding process norm, which too frequently turns out to be an abrasive, ill-informed and hit and miss affair.

Funding Enterprise makes no assumptions about equity gaps, nor fails to recognise that investment is a fundamentally risky business which requires the prospects of good returns.

We place ourself smack in the middle, seeking to maximise value creation. Opportunity is too precious to be squandered through bad funding planning and bad funding execution. Only a fraction of funding applicants will every attract serious funds. Indeed, only a fraction of them (until promoters themselves become more sophisticated in recognising genuine potential) will deserve to be funded.

But our economic growth and our future prosperity depends on backing promising hands with ambitious funding and not on blind rolls of the dice. Some radical innovation is required at the heart of the funding process. That is what Funding Enterprise is seeking to deliver.