BOOK OF THE WEEK: NEW ROUTES TO FUNDING by BARRY.E.JAMES

Hello people.

One challenge encountered by many entrepreneurs, especially budding ones, is the issue of funding. While a few entrepreneurs are fortunate to have wealthy parents who can afford to put thirty billion in their account, this, unfortunately, is not the reality of far too many others. The reality is that many entrepreneurs have to get funding through their sweat, blood and tears, and some never get funding after all is said and done.

The average African businessperson, when thinking about funding, usually relies on three sources:

(1) Personal savings/investments

(2)  Funds from family, friends and acquaintances

(3) Loans from banks, credit societies, etc

What many don’t know is that it is possible to get funds from total strangers through a process referred to as crowd funding.

A cynical person is probably thinking right now: ‘If a person cannot get funds from friends and acquaintances, then how is it possible to get funds from total strangers?’

Think no more. This week’s book, New Routes to Funding by Barry.E.James, teaches the concept of crowd funding and how entrepreneurs can use it to obtain funds for their business.

In the opening pages of the book, Barry lets readers know that the book is intended primarily for those who advise businesspeople on access to finance. 

He goes on to define seed crowdfunding as the use of crowdfunding platforms….to launch new products, services or businesses. A crowdfunding platform is a crowd of interested people who are willing to transact with business people, sometimes at low or no upfront costs. Barry suggests that opportunities to help start-ups and existing businesses are missed usually because many business advisors have no real experience with crowdfunding.

Stating that traditional investors generally will not invest in a business until it becomes a well known brand, whereas the businessperson needs the investor to finance the business before it can become a brand name in the first place, Barry submits that crowdfunding rescues the businessman from the proverbial chicken and egg dilemma.

He describes the four main models of funding and tackles eleven major myths of crowdfunding, such as the myths that:

·        Crowdfunding is a magic money tree

·        Crowdfunding only works for start-ups

·        Crowdfunding will soon be rife with fraud

·        Crowdfunding poses a danger to intellectual property, etc

This book contains a lot of hard data from research and analysis, and this gives the reader confidence that the author is writing facts and not subjective opinion. I found the data just a little too much though, and it is clear that the non financially savvy might have a hard time understanding the book.  Business advisors, on the other hand, are certain to find the book useful in their quest to understand crowdfunding.

I recommend the book to financially savvy entrepreneurs; it is one book that should grace the library of every financial advisor.