The Need For Funding: Small-Medium Sized Enterprises (SME)
The Backbone Of Our Economy
Small and Medium-sized Enterprises (SMEs) make up to 90% of all firms and account on average for 60-70% of total employment and 50% of GDP. Often, these businesses lack the experience to fund their growth. Bank loans are mostly the means to finance expansion. However, many smaller businesses cannot satisfy the bank requirement to qualify for the loan. Hence, SMEs need to be encouraged to utilize diversified sources of financing. (Source: OECD, Worldbank)
“Beyond debt financing, most commonly in the form of bank loans or a revolving overdraft facility, SMEs often struggle to identify alternative sources of funding, and particularly long-term funding. Ideally, private equity/venture capital is seen as an attractive proposition, as it often comes with value-added post-investment technical assistance and business strategy guidance attached to it.“
Bottlenecks faced by small businesses in developing countries (Source ITC, Worldbank)
Digital technologies such as Blockchain and Security Token Offerings (STO) gives companies, the ability to obtain alternative funding by digitalizing their assets or shares, disrupting a $24n+ market.