Getting funding can be hard if you want to avoid VC meetings or angel investor networking events, but crowd-funding alternative, BankToTheFuture.com was launched today to help people get invest and invest wisely. Whilst the system is structurally no different from existing crowd funding websites, it does invite users to pump up their ‘social capital’ – a way of determining how much social networking presence the website’s users have. Very snazzy indeed.
According to its founder, Simon Dixon, BankToTheFuture.com is designed so that ‘everything is transparent and open and people can see what happens with their, money, as well as offering support to the entrepreneurs and businesses that deserve it.’ The website verified people’s identity but adds the social capital check as another way of judging somebody’s suitability for investment: some would-be entrepreneurs will not have enough relationship with banks to have an acceptable credit rating, for example.
So when pitching for investment, the site uses the social networking element to attempt to judge how much commitment that person is willing to offer, and whether they have ‘the social capital to do well on that type of project.’ The site will continue to develop, too, with plans to introduce crowd lending in 2013: site users will be able to lend to others with agreed interest rates and returns. Let's just hope they don't require a flux capacitor and 1.21 gigawatts of power as collateral for a loan.
Not only does this completely undermine the traditional banking model (although we have seen some iterations of peer-to-peer lending already), but also it sidesteps the traditional financial institutions altogether. BankToTheFuture.com has even impressed Richard Branson, who said: ‘I like the goals of [the website]…It is great that they are offering support to entrepreneurs and businesses who will create jobs in the future.’ OK, it’s a bit anodyne, but Old Beardy is a busy man.
If only we had a flying car that was also a time machine, we too could go Back to the Future and find out how they are going to get on. We’re certainly interested to see if this type of banking/lending/investing takes off in the coming years, as it could mean banks losing out altogether on the SME investment market. But after the mis-selling saga having afflicted small businesses too, maybe it would be the best thing for them...