FundTheGap: Derek Uittenbroek
Derek Uittenbroek talks Startups through his online equity fundraising platform for start-ups
Name: Derek Uittenbroek
Staff numbers: 7
Date founded: 07/02/2013
Tell us what your business does:
FundTheGap is an online equity fundraising platform for start-ups and small businesses. Entrepreneurs can use the platform to raise up to £2m of investment from a number of qualified investors including high net worth investors, sophisticated investors but also young professionals and other investors passionate about investing in small businesses.
Our approach is slightly different, we want to offer the same screening of small businesses and start-ups as we offer our private investors, so we have replicated that process, including meeting each entrepreneur at least once face-to-face. We also invest between £500 and £50,000 in every business that we accept onto the platform.
Where did the idea for your business come from?
Last year a government-led task force identified that small businesses in the UK will face a funding gap of up to £191bnover the next four years. Bank lending and government initiatives alone will not be able to address this gap! Instead, we need to look towards private sector investment.
Over recent years it has become clear that there is a general willingness to support smaller businesses; people just need the mechanism to do it in a simple, intuitive and responsible way – and that’s why we started FundTheGap.
How did you know there was a market for it?
The alternative funding space was established relatively recently – largely in the form of crowdfunding and peer-to-peer lending – and it’s growing rapidly. In fact, Deloitte expects some £1.85bn to be invested through online funding platforms in 2013. We want to evolve the market and offer an educational and professional platform.
On the flip side, there are hundreds of thousands of businesses that are looking for funding. Even before launching the businesses, we have had over 50 requests from companies looking for funding – so it is clear that there was a market.
What were you doing before starting up?
Before I started FundTheGap, I was working in technology and strategy at Accenture. I worked with three of the top UK retail and corporate banks and got an excellent insight into their systems, processes and strategy.
Before Accenture I worked in smaller company fundraising at Smith & Williamson, a private top 10 UK accounting firm.
Have you always wanted to run your own business?
I have always had a passion for start-ups, and entrepreneurship generally. I am always convinced that there is a better, quicker or more streamlined way of doing things.
How did you raise the money?
I approached a number of ex-colleagues who have lots of experience in small company fundraising. They loved the idea, invested in the business and agreed to join the team. At the moment we are completely self-funded.
What challenges have you faced and how have you overcome them?
The rules and regulations that govern this space are extremely complex, and generally do not lend themselves very well to the online world.
We understand the importance of regulation and take it seriously. We invested a lot of time and money in creating a structure that we believe is compliant with the rules and regulations, and this was one of our biggest challenges.
Describe your business model and how you make money:
Companies pay a pitch fee of £500 to be featured on the platform. We work closely together with them to put together a business plan, and take them through a screening and verification process. We always meet the management teams behind each company we accept onto the platform – usually at least two to three times.
If the funds are raised successfully, we take a success fee of 5% of funds raised, and 1% per annum thereafter, for which we provide a useful investor relations service – so companies don’t end up dealing with lots of admin!
Investors can use the platform free of charge – there are no joining fees or annual membership fees.
What was your first big breakthrough?
For me, the first breakthrough was securing a strong management team. Combined, we have over 50 years’ experience in smaller company fundraising, and have raised well over £500mduring this period. It really gives FundTheGap the professional edge that I was looking for.
What advice would you give to budding entrepreneurs?
Be realistic about your valuation and be prepared to give equity away to bring the right level of expertise into the business. Having a 50% stake in a business with a strong management team with a proven track record and passion to execute is better than having 100% of an idea!
Where do you want to be in five years’ time?
I want FundTheGap to be a mainstream fundraising platform for start-ups and small businesses looking to raise funds, and a true alternative and complimentary source of funding alongside banks, angel investors and venture capital firms.