Tag Archives: Social Enterprise Magazine

The Good Side of Collapsing Global Capital Markets

The collapse of global markets has its downside.  You would have to be very callous not to consider the pain suffered by homeowners, pensioners and savers.  I also fear the negative consequences will continue for many years—perhaps a generation.  I do not think our political leaders yet fully appreciate this fact.

On aspect of the crisis has been a dramatic retrenchment in terms of international investment.   Banks tend to “bring money home” during a crisis.  This instinct has been further encouraged by political pressure as Government, having spent trillions bailing out the system, is urging banks to support domestic businesses.  The developing world has been badly hit but such a withdrawal of funds, which extends to many investors—not just the banks.

I contend there is a positive side to this—the growth of local funding, or its more colourful derivation, “crowdfunding”.  By local funding, I mean that people invest in things they know or feel comfortable with—and where better to start than with their local enterprises?  The Ebbsfleet United football club was a celebrated beneficiary of this when they were rescued by the “crowd” of fans (hence the name) to the tune of £600k.  During times of great uncertainty, I contend people will favour those businesses whom they know—where they can literally “kick the tires”.  At ClearlySo we imagine this sort of funding will be a high-growth area—this has already begun.

One County Council has approached us to work with them on a “local investment initiative”—as the concern grows over bank lending.  We are also working on a project for the HCT Group, which runs community transport primarily in London and Yorkshire (we disclose this with their permission), to explore methods of broadening funding sources.  Historically they have been funded by lease finance (backed by the busses).  If it were able to tap into local community sources of finance, this could lower its costs and provide a tangible way for the people it serves to take part in the prosperity they help to create.  Watch this space—we will see a great deal of activity here in years to come!

First published in Social Enterprise Magazine in May 2009.