Raising finance for SMEs: HAB Land interview
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Director of HAB Housing Tom Jarman tells us about raising finance for the business.
We caught up with Tom Jarman Director of HAB Housing this week to find out what lies at the heart of HAB’s business and why they’re raising funds now.
HAB Land launched their mini-bond with CODE at the start of 2017 and so far the raise has been massively successful. They smashed their initial target of £1,000,000.00 in the first week and have now doubled that amount with a month still to go!
What can you tell us about HAB?
Tom: HAB stands for Happiness, Architecture, Beauty. For us at HAB, it’s not simply a matter of bricks and mortar. We’re passionate about building new homes and places that respect the local context and biodiversity. Places that are strongly rooted in history and the community and are sustainable, beautiful and a joy to live in.
Under the HAB umbrella sit both HAB Land and HAB Housing. HAB Housing was formed in 2007 by Kevin McCloud to change the way houses and housing schemes are built in the UK. HAB Land came about in 2014 from a group of like-minded investors who formed to facilitate HAB Housing projects through purchasing land and active development.
What are you raising funds for and why now?
Tom: We’re raising capital for HAB Land to fund land acquisition and site development opportunities for HAB Housing to develop. Now is an opportune moment for a crowd fund as the business begins to scale up activities and to meet our ambition of building 500 houses per annum by 2020.
How is the fund raise going?
Tom: It’s totally exceeded our expectations. Our initial £1million was met within four days of the public launch. At our first close we raised £1.8 million. News of our crowd fund reached The Daily Telegraph, The Times and The Guardian with plenty of national and local press coverage.
Have you ever raised funds via crowdfunding or alternative finance before?
Tom: Yes, HAB Housing raised almost £2M of equity crowdfunding in 2013, a world record at that time. Since then we’ve raised launch finance for HAB Land Ltd, our land and build funding vehicle.
We raised almost £6M from a group of about 20 “High Net Worths” alongside management investment. After that we really wanted to open up investment in HAB Land to a wider group so are very pleased to be able to offer our first Mini-Bond with CODE.
Why Alternative Finance rather than the traditional finance route?
Tom: Banks can provide the debt needed to build schemes, and we have existing arrangements with major banks such as Lloyds and the HCA. In addition we need to raise equity finance for schemes, typically 20-40% of the scheme cost. This equity investment could come from institutional investors and funds, however we’re keen to engage with wider communities in all we do, including financing.
We’re really pleased to be able to offer attractive financial returns while also delivering wider environmental benefits. This type of “triple bottom line” investment opportunity, which delivers sustainable economic, environmental and social value is something we believe many would like to be able to participate in. Alternative finance is the perfect way of reaching a wide range of people who share these aspirations for investment that delivers sustainable benefits beyond merely a financial return.
What made you choose CODE Investing?
Tom: We felt that CODE had a refreshing and flexible approach to professionally supporting the opportunity
What was most important to you when deciding which funding platform to raise with?
Tom: How supportive and responsive the platform and the people behind it could be. We felt that CODE Investing offered us a good balance that would help our raise be a success.
What’s one of the biggest challenges as a small business raising funds?
Tom: Small businesses are resource constrained and management are typically well suited and motivated to drive the business. But they can be distracted by fund raising processes and investor demands, so maintaining focus on business growth while supporting investor/funder needs is challenging. We find crowdfunding more sympathetic to business need than some institutional investors.
What advice would you give to other business owners thinking of raising funds through alternative finance?
Tom: Don’t get too distracted by the fundraising process, ensure business growth and direction remains the primary focus. That and self-finance wherever possible, including through careful cash flow management.
If you’re interested in alternative finance as a means to grow your business, find out how you can raise funds with CODE Investing now.
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