I keep speaking with micro businesses, and people trying to help them, about access to funding. It's obviously a perennial problem and one that all governments seem to struggle with, never mind the entrepreneurs trying to grow their businesses and thereby our economy. The obvious solutions come in two forms. Either you borrow from the bank, assuming they'll lend to you and you have the stomach and acres of time to deal with them, their forms and their constant monitoring (I once received a threat of a £50 fine from my bank for failing to complete a minor form on a loan I'd already repaid), or you gift large amounts of equity to equally time consuming, and hungry, investors. Neither option is terribly appealing or that practical to your typical micro business person, struggling to build their business.
But I recently came across another solution. How about a bigger business, who's nervously sitting on it's cash, taking a micro under it's wing, in return for some equity, and giving it access to itself? Bigger businesses can usually borrow at silly rates right now and have access to economies of scale. What what if it took a suitable start up, in the same sector, under it's wing and grew it just by letting it have access to the same facilities it uses? The benefits to both businesses are obvious, especially as the parent gets to effectively grow new talent from within (take a look at what Google's up to) without having to put very much in place. We all know that growing entrepreneurs from within a workforce is almost pointless yet these are the people you need if you're going to stay ahead.
Can't say more at this stage but let's just say that I learned about this idea from personal experience. The real trick for the economy would be for government to find a way to facilitate this sort of thing on a wide scale. I've no idea which economic model it fits into, but it feels like a market intervention worth pursuing to me.
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Newspapers can be jerks
1 week ago
