April 7, 2020

How to finance a business during crisis?

Jekabs Vasilevskis

As we all know, the coronavirus outbreak has made a huge negative impact on people’s health, mental and financial state worldwide. One cannot possibly foresee the precise implications this crisis will entail, nor can anyone predict the time, when the world is up and fully running again.

As a fintech company that focuses on bringing together crowds of retail investors with businesses, we keep track on what is happening in the private sector, and things seem to be downcast. A network of accountants in the UK have done research, which suggest that somewhere between 800,000 and a million companies might have to close, simply because they might run out of cash.

This got us thinking – a perfectly sound business, that has scaling and profit potential in a standard market scenario should not be written off during the times of crisis. After all – all crises end, and the huge economic machine gets back to its former speed – or even faster. The only problem is, obviously, short supply of cash to winter the crisis out.

Large banks or governments are not only focused on large companies, but also would not have the time nor dedication to examine each case to aid smaller entrepreneurs financially. So where would a business have to go, to give a bit of equity in return for the imperative financial injection?

We think it’s the people. The people that sustain the business sector in the first place – customers. In return, the customers and investors would receive a small part of the company, for support during the economic downturn. At times like these, a 6 month financial runway would help businesses to pay rent, pay salaries, and, after this is all over – generate income for the investors and contributors.