Reference no: EM132696241

Crowdcube is the world's leading investment crowd funding platform. It allows anyone to invest in start-up, early stage and growth businesses. Businesses can pitch their ideas and state a set amount of capital required. Investors have limited liability and can decide how much they want to invest. This can be from as little as £10. Once the full amount of finance is pledged the investments are accepted and shares issued.

Faction Skis is a private limited company. It is a fast growing ski and outdoor clothing brand with a reputation for quality and innovation. It is using Crowdcube to raise £500,000 for a 3.5% equity in the business. The investment will fund a strategy of growth including expansion of its clothing range and entering new markets.

A full business plan, including information about the market, profit forecasts and a cash flow forecast can be downloaded from the Crowdcube website. The pitch does acknowledge that due to a poor cash cycle in the ski industry there will be an ongoing need to raise finance to meet day to day expenditure at certain times of the year.

1) Explain why crowd funding is an appropriate source of finance for Faction Skis.

2) Assess the importance of a business plan to Faction Skis.