microFunding: some Questions and Answers

Over the weeks, we have answered dozens of questions, ranging from simple (we like those best!) to some which have made us re-think details of how microFunding operates.

So we thought it would be useful to give a brief summary of the more common – hence useful – questions and answers this week.

But before we start, have you been ‘Microsofted’? You switch on your PC and wonder why it’s taking rather longer than usual to wake up. Then you get the message: ‘Microsoft Update in Progress. Do not switch off your computer. This may take several hours and you can not use your computer during the process’.

Can anyone invent something as an antidote? I’d buy it!

Anyway…..questions. What successes is microFunding having? We have at least two more deals that look very promising, about to go through fingers crossed; and some very exciting new ones being posted.

…..access to the Exchange through Introducer sites is expanding. Three more have ‘signed up’, and two more are about to launch. Inventors should remember that the cost of posting an invention depends only on which site they are using: one new one (not yet live) will be free and one existing live one charges just £15.00. But you need to bear in mind that you get what you pay for: it might well be better to pay a bit more and get some worthwhile help.

The most frequently asked question is ‘why haven’t any Managers selected my invention?’ If no-one is looking at your invention, then the Title simply isn’t working: it’s not pulling anyone in. If, however, Managers are looking but not biting, then you may need to go back to the drawing board with your idea. Unless, that is, it’s simply that you haven’t expressed in the posting why it’s so good. It’s one thing to keep the IP secret (quite right too) but not so secret that no-one can see what you’re trying to achieve…..

That’s why it could be worth paying a bit more, to get an expert to help write your posting. You may well reap significant rewards for very modest outlay!

Another question concerns the ‘Proof of Concept’ project. This is designed to achieve three things.

For the Inventor, it quickly clarifies whether or not there is something in the invention: a relatively quick ‘Yes’ or ‘No’

For the Manager, it’s Due Diligence and the Business Plan rolled into one. It’s entirely the Manager who runs the show, so it’s up to him to make it happen. And he must do so at minimal cost, because the PoC needs to determine what has to be done, not actually do it. What, how, who, when and how much: these are the fundamental questions that all businesses need to answer, and the PoC project has to answer them all. And if any answers come out wrong, it’s a shame but…..the ‘concept’ is unproven, the opportunity gone.

For the Investor, the PoC stage is ‘manna from heaven’. For a relatively trivial outlay, Investors discover which opportunities are genuine ‘goers’. And by backing the Manager’s skills and experience, Investors really limit their downside risk while seriously increasing their potential rewards. As I said, ‘Manna from heaven’.

A final question for this newsletter is from Investors: some have asked why they do not get shares in the PoC stage. And although it’s not traditional, the answer is obvious when you think about it.

Many of the PoC projects will unfortunately decide that the idea is not a ‘goer’ quite early on: maybe the IP is unsafe, or the product couldn’t be made for the right cost. In these cases, there could still be money left in the company, which has to go back. If it goes back to shareholders, they will get cash according to their shareholdings; if it goes back to loan funders, they get it all back. So: would you prefer to get back 30% of your money, or 100%….. not really a testing question, is it?

And again, Investors are not Directors of the company at the PoC stage. This is not an accident: company Directors can not qualify for EIS tax relief. So Investors can’t be Directors until after the equity investment, after the PoC stage has proved that there is genuine commercial potential in the idea. Of course, then they will be a Director. Until that time, their interests are guaranteed by the legal agreements and looked after by microFunding Ltd. Which is easy, because microFunding Ltd’s interests are the same as the Investor’s.

You can access the microFunding Exchange through any Introducer’s website, or directly through www.microfunding.co.uk.

Thank you very much for giving us your feedback. If you feel you can add a comment, do please use the ‘RatePoint’ feedback system – there is a link on the microfunding website.

Good Luck!

the microFunding Team

Banks and the government…when will they put their money were their mouth is with small business and start ups!?

Winston Churchill is famous for saying ‘I never worry about action, but only about inaction’ Although the governments are keen to keep financial and manufacturing giants in business by bailing them out with massive loans etc why aren’t governments making the funds available to smaller businesses too? It’s no bad thing that the governments will bail out the giants as the impact of such businesses going down would be catastrophic on the economies that depend on them but what about the smaller businesses, for whom the impact of failure, albeit localised, is just as bad for those involved? It appears that high profile = votes = must be saved, whereas low profile = swept under the carpet = deniable, unfortunate, just bad luck. Why aren’t governments making the funds available to smaller businesses too? They keep telling the banks ‘you must, it’s part of your loan agreement that you keep lending to smaller businesses’ – but that is not what happening, and all Gordon Brown does is ‘get angry’. Not too constructive. Maybe it’s time that the smaller businesses made a bigger noise? If they’re going to fail if they do nothing, might as well make a fuss about it – and perhaps making the fuss might generate the publicity to save them? So many people are saying that Small Business will save us in this recession, we will be the ones that start the cogs of the economy turning once more by introducing something exciting and encouraging spend for the good of the individual and in turn, the economy so we should, as Sir Winston says, take action as ‘This is no time for ease and comfort. It is the time to dare and endure’. Sir Winston Churchill What are your thoughts on this matter? Is the lobbying that goes on between the governments, the banks and the corporate giants just too much to overcome? Who will take care of the little guy?

Obama vs SME vs The World!

On Saturday I came across a copy of The Sun as I sat pondering away on the Tube, and opened it to Clarkson’s page – which I always find hilariously funny, a tad crass, but also somewhat poignant…for those of you who didnt get a chance to read it, the long and short is why is the world going crazy over Obama and expecting him to save the world – he is just a man…So I would like to put this to the masses…why is the world going crazy over Obama, and what can he do for our financial crisis, small business enterprise – and will he ‘save’ the world’s economy?

Well, Obama is clearly a great man if for no other reason than he’s beaten hundreds of other very good opponents to reach his goal – McCain, Clinton etc etc. That doesn’t make him bigger or better than a great man, but it does make him very special. And he is in a better position than anyone else to ‘save the world’. Though he’s clearly got his work REALLY cut out to ‘save’ it from Gordon’s ‘saving’!

Small businesses need the ‘world to be saved’. One big company going down with, say, 10,000 jobs lost will possibly lose 50,000 jobs in total after the knock-on effect on small suppliers is considered; and many of these jobs could be in the third world. (I don’t know what the multiplier really is, but 5 to 1 can’t be too far off)…

So what we need is a leader, someone to inspire confidence and help us to move on, build our bridges and get across hem, as Charles Kettering once said ‘No one would have ever crossed the ocean if they could have got off the boat during the storm’…with small business being encouraged, we could be the ones to get the markets moving once more – bring something new to the global markets and encourage the flow of currency again…as at the moment, if I hear another person say ‘I will wait and see what the markets are doing’ I will scream – as they are clearly not doing  lot!

But the question I am asking is; Is Obama this person to inspire such confidence in us and each other, to get us moving? Obama himself inspires the entrepreneurship, as Alex Bellinger at SmallBizPod says:

‘A leader who can build confidence, loyalty, inspire people with a vision and reveal his or her common humanity to connect on a personal level, is a strong leader. A leader that in many ways evokes the essence of the entrepreneurial.

Obama, right now, is achieving that.  He is the embodiment of the American dream, as many have said over the past few days, but he’s also the embodiment of the US entrepreneurial spirit.’

So, I say, YES HE CAN! He can inspire our markets and be the defibulator that electricutes them back to life, and he can inspire us entrepreneurs to get back on the horse and believe in orselves and the world’s economies once more!