Innovations in financial technology, or fintech, are transforming the ways that small companies find funding and grow their business. Here are three of the most exciting ideas on the horizon.
1. How much is your business worth?
The problem: Being able to accurately predict your future growth based on past financials, while assessing your company’s potential relative to your sector and region, can play a major role in devising strategy, setting realistic goals and persuading a lender to give you a shot. Unfortunately, if you get a financial adviser involved, this could take months and set you back thousands of pounds.
The solution: Using a seven step online process, a new website called BizEquity can now give SMEs an impressively accurate picture of their worth and where they stand in their industry, while signing up for a subscription will get you in depth analysis for a snip of the normal price. But don’t just take it from us: the company won best in show and most disruptive new technology at this week’s Finovate Europe conference.
2. Plan your finances like a boss
The problem: Cash(flow) is king, and a successful SME knows that they have to keep their eye on the ball to make sure they don’t get stung by a lean month or the unexpected loss of a client. For most, though, that’s as far as it goes. Interpreting all the ebbs and flows and working out exactly how they relate to wider business activities is often seen as a labour-intensive luxury.
The solution: Banking technology company Strands has branched out its personal finance management technology into business, and the result is compelling. Just as the PFM system helps users to analyse where their money is going and how they ought to budget with little more than a few clicks, the business version swiftly interprets cashflow and income trends to help you visualise what is happening in your business. It then relates this back to the kind of business you run, recommending targeted marketing campaigns that can be linked back into the system so that you can see immediately how they impact on financial results, and adapt your business plan accordingly.
3. Access to a global network of investors
The problem: Banks in the developed world don’t want to lend, leaving a £1bn annual funding gap in the UK alone. In the developing world, meanwhile, swathes of small business owners lack access to a bank account, let alone an angel investor network. SMEs everywhere are frustrated with their lack of access to capital, and the traditional finance sector is doing little to help.
The solution: Alternative funding platforms, corporate crowdfunders and P2P lending schemes are all taking off at an incredible rate, but one of the more avant-garde approaches has come from BitBond, a new lending matchmaker that allocates funds exclusively using the digital currency Bitcoin. Using a cryptocurrency for loans, says the company, means that investors can choose to invest in companies all over the world with no forex headaches – and recipients don’t even need a bank account to take part. While it may sound niche, BitBond claims to have already matched up 440 companies with low-cost loans, making it a fascinating alternative to traditional lending.