A London-based entrepreneur is flying high after securing funding for his business.
However, Oliver Morgan, founder of fuel supply company Universal Fuels, did not rely on the bank to raise part of the £250,000 he required to drive the company forward.
Instead, he turned to crowd funding website Crowdcube to raise £100,000 of that total, which will be used to help the Croydon-based company expand into the forecourt retail sector and export its lubricants products overseas. Morgan also plans to buy road tankers in a bid to cut Universal’s transport costs. Not bad for a company that was only formed in 2009.
Crowd funding involves a group of people pooling their money together to back a business venture. It is becoming an increasingly popular way of funding business start-ups looking to expand, especially in an era when borrowing from high street lenders can be difficult.
Commenting on why he opted to use crowd-funding ahead of venture capital and angel investors, Morgan said: “Having a large number of potential customers becoming shareholders over one or two VCs (venture capitalists) or angels who would be focused on quick ROIs (return on investments) and exit options seemed a no-brainer.
“There are a large number of reasons why crowd funding is a better route for an investment size of this amount for a consumer facing business. One, you don’t just get investors – you get loyal customers and cheerleaders.
“Two, you don’t have one or two very large investors breathing down your neck. Three, having 100 shareholders/customers can make the difference when entering a new market to give you some level of instant scale.
“And you get your own personal focus group to get opinions from and try new products out on. Not forgetting 100 heads are better than one.”
The future looks bright for Universal Fuels, which has gone from strength to strength since being formed three years ago. Finance is often key to robust expansion plans and Morgan had a few wise words for business owners looking to raise enough money to finance expansion.
He said: “Try crowd funding, it’s the best way in my opinion. But also be confident in reaching out to VCs, people quickly get a sense of how much you believe in what you’re saying, and if the belief is there you find many doors will open easier than you might have thought.”