Following their recent successful funding round, we catch up with Conrad Ford, CEO of Funding Options on the journey they’ve been on over the past four years
I was working for one of the big banks at the time of the credit crunch, and it was clear to me that SMEs were having a very tough time finding finance. Compared to previous years the amount lent to SMEs had dropped by billions of pounds – however, despite popular opinion, I felt that the problem wasn’t a lack of available finance, but rather those small businesses were simply struggling to find it.
Sadly, repeated surveys have shown that when small business owners are rejected for finance by their bank, the majority simply give up, or sometimes even go under. In fact there are dozens of products and hundreds of alternative finance providers out there who have a different set of criteria to traditional bank loans and overdrafts. To put it simply, many of those SMEs who gave up after being rejected by the banks could have found finance if they’d only known where to look.
For many other industries where customers have to navigate a complex and varied market, the internet had been transformative – for example travel agents on the high street being almost entirely replaced by online services like Expedia, Skyscanner and Lastminute.com – why couldn’t we take the same approach for alternative business lending?
A launchpad for success
By the spring of 2011, I wondered how I could raise the finance for such a venture. The Tech City UK Launchpad, a new type of government-funded grant from Innovate UK to nurture research and development projects, was an attractive prospect. Traditionally, government grants required you to have already secured private sector funding, which they would then match. Run as a competition, Tech City UK’s Launchpad turned this on its head, issuing a letter of intent that essentially stated to private investors “if you fund this, we’ll match it”. In true startup style, I submitted my entry video for Funding Options less than an hour before the deadline!
Happily, we were shortlisted and eventually selected for a £100,000 grant. Another great thing about the Tech City Launchpad was that private investors were much more likely to meet you, knowing that you were one of a handful of winning companies carefully chosen from hundreds of entries. We quickly found angel investors to match our grant funding, so with money in the bank it was time to get started.
Looking to the future
A little over three years later, we’ve been through all the ups and downs of a startup. The difference between our initial approach and where we are now is staggering, and there has been a process of constant refinement and adjustment. Much of what we thought we knew has changed, and after live market testing we found the third or fourth iteration of our platform to be a very different animal than the one we set out to make. We also found technology alone is not enough, and opened an office in the North West in 2014 to provide expert customer support.
As well as the various technical challenges, the landscape is markedly different four years on from the Tech City Launchpad. Dozens more alternative finance providers have cropped up, and most importantly, SME owners increasingly realise that they can use the internet in ways they have done as consumers for years.
The political world has changed too – the government recently passed a law requiring banks to refer rejected SMEs to alternate finance through online platforms like ours.
Greater choice for small businesses all over the UK
We never lost confidence in the initial idea that drives Funding Options – if we can help more SMEs find finance, the impact on communities and the country will be huge. We’ve just secured a round of investment to the tune of £2million, and currently have around a dozen employees based in both London and the North West. We expect to have double the staff within a few months.
This latest investment gives us the capability to upgrade our website and increase our marketing efforts, while refining the technical aspects of the business, so we can reach out to more small businesses and help them survive and grow. Tech City and Innovate UK provided the launchpad that Funding Options was looking for, and I’m extremely proud that we have already helped other small businesses raise tens of millions of pounds of finance all over the country. I hope we can continue on our path to help many, many more.