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The Bank of Mum and Dad…and the would-be Entrepreneur

23rd May 2017

The 'Bank of mum and dad’ is currently a hot topic trending across social media and provoking some interesting debate. Sources say it is now the ninth largest mortgage provider in the UK and expected to fund £6.5 billion into the housing market this year alone.

The average cost of a house now sits at £218k with the average first mortgage at the age of 30 years. On that basis should we really be surprised that children are looking to their parents for business funding as well as for help to get onto the property ladder?

Over half of entrepreneurs now rely on family members to help them get their business off the ground, but is this the responsibility of parents or family? If they are already seen to be the go-to for financial help with housing, is it their role to also help with a start-up business when the risk of seeing that money again is potentially much higher? If so, should they also be entitled to shares as an investor or are they expected to let their children reap the rewards in isolation?

There is an argument that entrepreneurs need to be able to stand on their own two feet and source investment themselves (as this is an important trait of the traditional and successful entrepreneur) or is it simply a great opportunity for parents and other family members to treat this like any other business investment with a potentially profitable return? Certainly food for thought…

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