equityEquity
Capital at risk
£35.8m
Valuation
3.4%
Equity share
EIS
Capital at risk
EIS
Amount
£
ownership
Minimum investment is £5,000
EIS Tax Relief
£
Ownership share

Crowd2fund is an investment platform for entrepreneurs by entrepreneurs. Uniquely, investors choose the entrepreneurs they back rather than investing the money into a pooled fund. This means investors can potentially generate much higher returns, up to 15% tax-free with the IFISA. Businesses benefit because they can reduce the cost of borrowing by inviting their own investors or offering tangible rewards. Crowd2Fund has recently been authorised for EIS, which means there are generous tax incentives for investors who invest in this funding round. Crowd2Fund is aiming to grow to a value of at least £353m by 2024.

Pioneering a new breed of credit.

ENTERPRISE INVESTMENT SCHEME TAX RELIEF

EIS is a tremendously generous tax scheme for investors where investors can claim 30% tax relief from their investment back from HMRC. Investors can also claim loss relief in the unlikely event the business fails and pay no capital gains tax on any future earnings from the sale of their shares.

For example, if you invested £20,000 in this round you would be potentially eligible to claim £6,000 in the form of tax relief and also claim £6,300 in loss relief. This means that you would only be exposed by £7,700. If you are an existing investor, we are also offering a £5,000 loyalty reward if you invest £20,000 in this round [1].

Being granted EIS is significant because up to £12m can be invested via this scheme. Next year we plan to continue scaling the company by securing a Series A investment round of £10m also via EIS. The business is ready to scale because of our historical data and proven business model with the ability to scale via increased direct business sales.

WE ARE BUILT BY ENTREPRENEURS, FOR ENTREPRENEURS

Uniquely with Crowd2Fund, investors can select their own businesses and entrepreneurs to invest in, define the amount they wish to invest, and conduct their own due diligence thanks to the transparency of the platform. Having world-class technology and compliance at our core allows us to achieve this. ‘The Exchange’ also allows investors to access their cash, if needed, by trading with other investors. The Exchange also helps investors diversify their portfolios to help manage potential losses– all from their desktop computer or mobile app.

WE HAVE REGULATION AND COMPLIANCE ARE AT OUR CORE

We work with the FCA and HMRC to maintain robust processes, which build trust and offer a better service for our clients. This, along with a significantly different client proposition to other platforms, has allowed us to achieve our unprecedented growth. We are also an authorised Innovative Finance ISA manager, meaning with Crowd2Fund, investor returns are tax-free.

We work tirelessly to find the best opportunities for our investors to invest in, present opportunities clearly and maximise investors returns and satisfaction.

Businesses borrow through us, rather than another platform or bank, because they also gain a community of like-minded investors, who act as brand advocates, driving sales across local and global markets; we build communities, not just portfolios. Companies can offer a tangible product as a reward to reduce the cost of borrowing and increase customer loyalty by offering product discounts if they invest.

By building direct relationships between businesses and investors, we enrich the investing and fundraising experience. Investors can choose their own investments, and invest directly into growing, carefully selected entrepreneurs.

WE ARE POWERED BY REVOLUTIONARY TECHNOLOGY

We continued to innovate in 2018 with the implementation of a new user interface, the launch of our new iOS app, the optimisation of our operational processes, and the development of an increasingly effective recovery system. We are developing an optional contingency fund next year to help protect participating investors, by allowing losses to be shared between the community. We have also made great progress in becoming Blockchain-enabled, as we migrated to a new payment provider earlier this year offering more benefits to investors. With our dedicated and talented teams, we are certain that 2019 will see us exceed our goals.

It is our priority to stay on the cutting-edge of FinTech. This work comes with endless opportunities, such as more innovative improvements to the user experience, new recoveries features, a portal for business referrers, equity trading on the Exchange, and the development of an Android app. Expansion of our international businesses via the new FinTech trade bridge to Australia and Canada will continue, which will create additional future investment opportunities.[2]

WE DELIVER BETTER RETURNS THAN OUR COMPETITORS

Our returns are highly competitive: so far we have generated about £3m in interest for our investors who are lending at 10.46% APR, resulting in an average platform return of 7.87% APR tax-free, after fees and bad debt over the last 12 months.[3] These higher returns are achievable due to the efficiencies offered by peer-to-business lending, a superior credit assessment approach, as well as the added transparency of Crowd2Fund and scrutiny of our community.

WE HAVE CREATED CONSISTENT SUCCESS

We are overwhelmingly proud of what has been achieved so far. The Crowd2Fund community has lent £35m to 450 businesses and entrepreneurs, supporting their growth. We have created countless jobs and in total, these businesses have generated more than £1.2bn for the UK economy. As a community, we also won the Money Net award for Best Innovative Finance ISA provider for 2018. Our annual revenue has grown from just £26k in 2016 to £832k in 2018 – a 32x increase.[4]

GFIN AND THE FINTECH BRIDGE

We are one of ten companies selected by the Department for International Trade to be on a highly prestigious international FinTech programme, which is to facilitate cross border trade in the FinTech sector between Australia and the United Kingdom. At this time, we are actively setting up in Australia.

We are also a keen supporter of the GFIN. A new global trade hub specifically for FinTech focused on facilitating cross-jurisdiction FinTech transactions. We plan to expand internationally across this network and are keenly watching for the alignment of regulations which will make it much easier to penetrate international markets.

PROVEN BUSINESS MODEL

The last year has been critical in the company development because we have been waiting for EIS approval, consolidating technology such as changing payment provider and proving our direct sales channel cost of acquisition for £100k loan.

This has all been critical to put in place prior to raising an institutional round to scale the company. Most importantly proving the CPA for direct leads means we’re not beholden to the limited number of deals brokers can send us and can tap into the £2bn of transactions in the wider UK marketplace.

We have proven over the May to July period that our cost per acquisition for a business loan worth £100,000 costs £3,090.39 in marketing spend. This generates a gross profit margin of 48.5%, however, with repeat customers this reduces to £1,846.11, which accounts for 23.5% of loans. [5]

Our CPA/£100k this year through all channels is £2,442.53 which means the cost of sale to achieve £34m within one year is approximately £830k [6]. On the other side of the marketplace, the cost of acquisition for a new investor is £347.34, where the investor invests £9,160 on average in their first year, then £6,753 per year [7]. Therefore to ensure the liquidity is available to complete the above deals, a £920k investment is needed for new investor acquisition. Our detailed financial model is available for review.

We want to push this further with our first Series A investment next year of £10m via our EIS authorisation, allowing us to grow the company to a value of £353m, giving you a 10x return on your investment assuming you top up to avoid dilution.

FURTHER GROWTH

Our ambition is, however, to seize the market opportunity and grow the business further. The current market size is £2bn in transactions per year. Crowd2Fund believe it is possible to secure a 29% market share and challenge the dominant player who owns 87% market share but is currently suffering reputationally. Crowd2Fund would need to grow its revenue to £35m, by transacting £585m in credit, funding 7,312 business per year with around 86,628 active investors. This is possible with a further £20m in investment post-EIS rounds.

OUR VISION

Longer-term we are looking to develop the worlds first decentralised bank. This means that we will be offering full banking services to businesses and investors in the form of bank accounts and debit cards. Our banking system will be focused on small businesses and this is where users will receive their interest. Interest earned by users selecting and lending to businesses directly or an automated investing AI system. We aim for the bank to be mainly automated and fully transparent to the extent where it’s users even have the option to own the bank. Imagine the capability of a new challenger bank but with a peer to peer capability combined. The bank will deliver a superior service and returns for investors but also liquidity needed to power the new entrepreneur-led economy of the future.

JOIN US IN DEVELOPING THE FINANCIAL SYSTEM OF THE FUTURE

We would be delighted for you to join Crowd2Fund in this private investment round. You can also download the confidential Crowd2Fund 2019 business plan containing in-depth insights about this exclusive opportunity. Please feel free to ask any questions below or request any further information.


[1] https://www.gov.uk/guidance/venture-capital-schemes-tax-relief-for-investors
[2] https://treasury.gov.au/fintech/uk-australia-fintech-bridge
[3] These figures are accurate for the period starting 21st September 2018 to 20th September 2019
[4] These figures are based on our audited 2018 accounts, available for review
[5] 23.5% of the deals in 2018 were from repeat businesses
[6] CPA for directs is based on figures from May to July 2019. Overall CPA/£100k across all channels for 2019 is £2,443
[7] CPA for investors based on investor marketing spend in 18/19 financial accounts. The average annual investment amount is taken from the investments made between April 2017 and March 2019

X

Equity - product type
Maximum
£ 1.2m
Raised
£ 215k
Investors
23
Estimated close date
10d 16h

Where will the funds go?

Platform development
£348,000
New investors
£910,800
Business advertising
£892,800
Team salaries
£510,000
Legal, compliance and operations
£324,000
Revenue earned (total costs £1.2m)
£1,785,600

Key people

Chris Hancock
CEO
Nicky Pace
Managing Director
John Daniel
Strategic Finance Director
Rob Older
Content Director
Liviu Dragulin
Director of Tech Ops
Mike Boehm
Tech Development
Hannah Colgan
Senior Risk Analyst
Russell Tolley
Commercial Director
Hamish Chreseson
Risk Analyst
Caroline Gill
Marketing Manager
Jen Garcia
International Project Manager
Cosmina Palade
Front End Engineer
Katherine Atkin
Advisor
Nigel Webber
Advisor
Michael Fischer
Advisor
Mahmood Yusuf
Advisor
Red cup

Investor rewards

Join our club

If you invest £5,000 - £9,999
Get yourself a limited edition Smart-Coin and gain access to Investor Club benefits and receive up to £2,999 EIS tax-relief

Zero fees for life

If you invest £10,000 - £19,999
Zero fees on Crowd2Fund for life and up to £5,999 EIS tax-relief

Myoshka Artwork and more

If you invest £20,000 - £49,999
Receive a limited edition Myoshka Crowd2Fund artwork, with more exclusive perks and events to follow and up to £14,999 EIS tax relief

Bonus shares

If you invest £50,000 - £99,999
Receive an extra 25% in bonus share, plus the above and up to £29,999 EIS tax-relief

Have your say

If you invest £100,000+
Become an informal advisor and input into the growth of the firm, plus above and a potential minimum of £30,000 EIS tax-relief

Got a question for the business?

For more information on the business, please login and ask them a question directly.Sign In to Ask

A. Barbra,

The current director is the founder Chris Hancock who is supported by an informal advisory board and non executive director panel. When a series A is secured a more formal governance framework may be established if appropriate.

Ms Huang still retains her share ownership.

Thanks

The Crowd2Fund Team

A. Michael,

In the specific peer to business lending space in which Crowd2Fund operates there is very limited competition offering this model where the primary proposition is to allow investors to choose the businesses and conduct their own additional due diligence. This allows investors to potentially make better returns however the risk is that higher losses may be incurred.

The main competitor in the peer to business lending space in the UK operates a pooled fund which does not allow the investors to choose the businesses. They currently dominate with 87% of market share.

Thanks

The Crowd2Fund Team

A. Stephanie,

Thanks for your question.

The main differentiator with Crowd2Fund is that we allow investors to choose the entrepreneurs they want to back unlike a pooled fund where investment funds are directed by the platforms themselves. It is unique to do this with a debt based financial product. Coupled with the ability for businesses to reduce the cost of finance by offering a tangible product or by inviting their own investor community to the round is a radically different approach to anything else out there. This allows us to deliver a better investing experience for our investors, because you get the choice, and therefore can challenge the dominant position of some of the larger platforms.

Thanks

The Crowd2Fund Team

A. Chris,

The EIS3 certificates are currently being processed as a top priority and should be delivered to shareholders over the next few weeks, however, we are unable to guarantee when as there is a dependency on HMRC.

Thanks

The Crowd2Fund Team

A. Barbra,

This investment is not a debt investment but is an equity investment therefore the Equifax score is less relevant but the score is 94/100.

Thanks

The Crowd2Fund Team

A. Hey Chris,

We have received confirmation of Advance Assurance from HMRC. The confirmation can not be shared however the Crowd2Fund 3rd party legal team can confirm this and we will request this from them if it is a pre requisite to an investment.

Thanks

The Crowd2Fund Team

A. Lee,

As I’m sure you understand, often growing too quickly is not the right thing to achieve the longer term and more successful goal.

We have purposefully not yet raised large amounts of institutional money which would potentially allow us to achieve these target valuations. This is partly because of the delayed EIS approval which is an obvious pre requisite and will allows us to raise funds much more effectively. Really important elements have also been worked on such as the ability to tap into the £2bn of transactions within the sector in a competitive cost effective way due to significantly improved marketing and processes to attract businesses directly, rather than via brokers and referral partners. Now we have much more reliable data around the direct marketing cost of acquisition for a business loan and investor our financial model is much more reliable and therefore lower risk. Raising sooner could have led to investment funds being deployed inefficiently. We have also delivered significant improvements with the scalability of the technology and migration away from our old expensive payment provider, which also need to be in place prior to scaling.

Now we can raise £12m of EIS funds we can grow the business to be lending £210m per year to 2,628 hard working entrepreneurs and value Crowd2Fund at £99m, based on £12.5m generated in revenue. We do however plan to go further than that, in line with our original forecasts and raise at least a further £20m after EIS to allow us to achieve the £1bn valuation which is eminently achievable with 30% UK market penetration - which is looking more and more achievable, due to the poor service offering from the larger competitors.

Thanks

The Crowd2Fund Team

A. Adam,

What the 1st wave of incumbent platforms achieved was incredible.

However, we see the repetitional damage of the incumbent larger platforms due to poor service offering and a flawed proposition as an opportunity. This has now formed part of our growth strategy to seize market share of at least 30% within the UK. We believe we can achieve this because we are a newer and more modern platform with a more innovative approach always taking industry learnings onboard. We are able to learn from older competitive platforms while we are still relatively early stage. We think historically the most successful platforms are not always the first wave of platforms to launch. Our approach is an evolution of platforms like Funding Circle which pool funds, rather than giving investors control and choice over the investments they make. Businesses leverage this approach because having access to the community of investors helps their business grow and they can also reduce the cost of the finance.

All businesses are facing challenges in the slower economic client however UK FinTech is resilient and again often a slower climate can be used to strengthen the business and ensure we don’t grow too quickly which is often to the detriment of the longer term vision.

Thanks

The Crowd2Fund Team

A. Michael,

This is indeed a follow on or tranche from the round conducted earlier this year that we paused due to the delay with EIS authorisation. We had re purposed the proposition based on the massive achievements over the last 6 months including becoming EIS authorised. Many investors did not invest earlier in the year because they wanted to see EIS in place before making a commitment. EIS is really generous so I hope you will come in on this round, especially with the rewards. In the section detailing where will the funds go, we have included the revenue generated by the business over the next 12 months when the funds will be invested. Now we have proven that we can access the £2bn of transactions within the UK with a cost effective margin we can fund more businesses but need to also increase our investor community at the same time. The detailed financial are available in our business plan which you can download from this page.

Thanks

The Crowd2Fund Team

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Business brand

London, UK

"Pioneering a new breed of credit."

Business stage
Expansion
Incorporated
6 years, 6 months
Investment strategy
Target valuation
£353,156,737
Target share value
9.9x
 

The target valuation is not a target return on your investment but simply indicates the desired and forecast growth of the platform. If the target valuation is achieved then your shares would need to be sold at this valuation for you to realise the investment.

Investments like these involve risks including loss of capital.
Please see our risk section before making an investment decision.

Risk warning

Investments like these involve risks including loss of capital. Please see our risk section before making an investment decision