Organic Hospitality crowd-funds its expansion plans

By in cloud, management, strategy on Tuesday, 5 November 2013

Organic Hospitality goes to Crowdcube to fund expansion
Specialist marketing agency Organic Hospitality is using crowdfunding to raise capital for expansion.

Graeme Kerr, the Glasgow entrepreneur behind Organic Hospitality, is using Crowdcube, the commpany chosen by TV’s Kevin “Grand Designs” McLeod recent £2 Million pound investment plans.

Graeme is looking for £150,000 to grow Organic Hospitality as a specialist marketing agency for the exclusive four and five star boutique hotel and tourism market in the UK and abroad. His company already lists prestigious hotels such as Mar Hall and Sherbrooke Castle as clients and undertook a large branding and web design project for St Andrews last year.

Kerr opted for crowdfunding because of the opportunity it provides for individuals to invest cash – as little as £10 and as much as the full £150,000 in his case – in return for discounts off the company’s services and a stake in the business.

He said: “I considered the normal funding routes for Organic Hospitality, but they didn’t fit the bill. Angel investors wanted too big a stake in the business and I didn’t even want to consider the bank route these days.

“Crowdcube has demonstrated that entrepreneurs can access funds that previously have been inaccessible and that investors can look forward to getting in on the ground floor of growing businesses and reaping potentially great rewards.”

Investors can gain Enterprise Investment Scheme tax relief, designed to help smaller companies. Relief is at 30 per cent of the cost of the shares, to be set against the individual’s Income Tax liability for the tax year in which the investment was made. Investors from the hospitality industry will also be eligible for discounts of up to 20% on Organic Hospitality’s proven services.

He is confident that he will achieve the £150,000 target well within the time limit, and, if it is reached earlier than expected, he can go into an overfunding mode, potentially realising up to £250,000.

So who is Crowdcube?

Crowdcube was only established in February 2011, but has so far raised nearly £15 million for 76 start-up businesses, attracting 48,886 registered investors. It is regulated by the Financial Conduct Authority.

Co-founder Luke Lang said when the firm passed the £10 million investment mark: “Today’s banking system is outdated. It doesn’t give early stage small businesses and start-ups access to the funding they need to grow and drive the desperately needed economic recovery.”

Why Organic Hospitality?

Kerr answers “There are very few hotel and tourism specific agencies in the UK and by specialising in this sector, we believe we offer clients a range of services that save them time and make their marketing more effective. We think within this arena we can carve a name for ourselves and provide a real return on investment.”

Organic Hospitality intends to use the initial fund-raising round to establish a strong presence in the lucrative London market, then expanding into the North American and Asian markets.

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