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The way through the woods

Too many clients still conflate funding with investment. Know the difference, and choose your path wisely, writes Karen Holden

Funding and investment are words I hear daily as many of my clients start their enterprising journey. The two terms are used interchangeably. But I define them as very distinct opportunities. Many clients fail to understand the array of options available to them, and the risks and benefits of each. Too often, people dive in, unaware – because of desperation, excitement, naivety or ignorance – that there is more than one path open to them. Because of this, my legal practice seeks to fill a space that the finance sector has created. We can discuss the many options available in the market without conflict or personal gain;

Sadly, those that take the wrong path can very rarely get off it explain the differences; highlight the legal pros and cons; and start them on the right path for them and their business. We say “without conflict” as we do not profit from whichever route they take. Take debt financing, bank loans, bank growth enablers and corporate bonds. These options are very much ‘funding’ for your business, as no equity is passed over – although creditors will want to see a payment vehicle

and a detailed plan. These are in sharp contrast to crowdfunding and angel investment. While equity investment might mean that you are not ‘on the hook’ for a loan or to pay back, you have released a share of your empire, and you may have to accommodate investors’ requirements. There are many opportunities, rates, structures, brokers and platforms. But how do you know where to start? I set up in 2009 with £5,000 and a case of files. I made the common mistake that many starting out on their own do – I extended too much credit to clients, failed to find the right accountants at the outset, and lacked the requisite understanding of my cash flow. But seven years later I am a far better solicitor, since I can understand and offer practical and legal advice in relation to starting up, surviving and developing a business. I use my mistakes and the strengths I discovered to help my clients avoid their own bumps in the road. As a result of my experiences, I identified gaps in the legal and financial sectors. This discovery has enabled my company to advise clients on various alternative routes. And we ourselves have sought to develop these avenues further, for example:


Creating corporate bonds anywhere from £5-20 million, which permit companies to raise funding from retail, overseas and

Dialogue Q3 2017

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Dialogue Q3 2017  
Dialogue Q3 2017