The valuation challenge with crowdfunding

No comments

pound money economy web bank

The valuation challenge

Sir, I read with interest your article ‘The Trouble with Crowdfunding’. As the CEO of an equity investment platform, where young British businesses come to get their businesses funded, many of the issues discussed struck a chord with me. The point around valuations is a particularly challenging one - and I meet with many entrepreneurs who find it difficult to value their own business.

More often than not, crowdfunding platforms encourage the companies themselves to value their own business. This ‘company-led’ approach can sometimes result in valuations that are on the high side.

We believe in an investor-led approach, whereby a professional investor (business angel or VC) sets the terms, rather than the company. This may well result in a lower valuation in the short term, but in the long term it works; for investors, future rounds and the industry as a whole.

When it comes to valuations, the perception may be that higher is better, but that’s just not true. Get it right at the beginning, for the most productive and positive equity journey.

Gonçalo de Vasconcelos, CEO and co-founder, SyndicateRoom

Future-proofing

Sir, Any supplier ‘left reeling’ by Sainsbury’s approach to ‘commodity’ brands is simply not in touch with today’s harsh realities. Brands not generating a solid business result, based on the strength and relevance of their consumer proposition, deserve to be put under the commercial spotlight.

Sainsbury’s and every other retailer want to stock thriving brands. Thriving brands are those constantly future-proofing themselves against changing consumer needs. By taking a category marketing approach that they align with their customers, leading suppliers position their portfolios against agreed future drivers of growth. Future-proofed brands stay relevant. Relevant brands stay on shelves, no questions asked, by Sainsbury’s, or anyone else.

Duncan MacConnol, COO, The Quantic Group

Organic is free-range

Sir, So Neil Darwent, who runs Pasture Promise, asks ‘I struggle to see what has suddenly made Arla’s organic milk free-range’(’Arla Foods repositions flagship Organic Farm Milk as Free Range,’). The answer is, of course, nothing - organic milk has always been free-range - and more. As others are mentioning ‘free-range’ on their milk (on the basis of ‘free-range’ dairy requiring 180 days grazing, compared with the over 200 days actually spent grazing outdoors by organic cows), the Soil Association is pleased to see a big brand emphasising the ‘free-range’ aspect of organic milk.