Debt Shy MBA Entrepreneurs Shun Banks and Self-Finance Start-Ups

When Elizabetta Camilleri was pooling funds together to launch her start-up business three years ago, she did not intend to break into the bank. The Maltese entrepreneur, who studied an MBA at London Business School, shied away from the risk.

So did the banks. “I don’t think banks were going to give us a loan on an idea. Even people who have strong businesses struggle to get loans from a bank – let alone someone with [just] a good idea,” said Elizabetta, who set-up SalesGossip with Emilio Sanz in 2011.

The start-up provides an online and mobile service that gives users access to fashion and beauty deals. Since launch day, the fledgling founders have signed up more than 600 fashion stores in the UK, and their mobile app user-base has swelled from 500 to around 250,000 users.

“In reality there is a lot of risk associated with start-ups… banks shy away from that,” added Elizabetta, who helped self-fund her company’s launch, the total pot reaching £300,000.

Since the financial crisis, the high-street lenders have been scaling back their SME loans and many are no longer willing to take a punt and gamble on up-starters.

SalesGossip is one of a multitude of small firms who turned their backs on traditional start-up finance to launch. Crowdfunding has become a more viable option, but many business school graduates prefer to invest personal capital – and retain all of their equity. If a business succeeds in growing, the decision will pay dividends.

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