Due to the success of the oversubscribed private investor funding round at the end of 2017, Crowd2Fund are launching a new 2019 exclusive opportunity to allow its community to own more of the platform they grow. Crowd2Fund has accelerated its 2018 annual growth to 317%, generating £832k in revenue. This round will enable us to achieve £40m in new loans and aim for a company valuation of £68m by the end of 2019. With the successful completion of this round we will continue our exponential growth and continue with innovation and delivery of amazing investor experiences.
Our revenue grows at least 317% year-on-year. Share in our success and invest today.
Crowd2Fund is a significantly more innovative business than our competitors. Uniquely, investors can browse and 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.
UK FinTech is one of the fastest growing markets in the world. The first P2P platform floatation valued at £1.5bn was achieved this year, which is excellent news for their early investors and other innovative UK FinTech companies like Crowd2Fund. The macroeconomic drivers are in place and banks are unable to lend to SMEs easily, who are a critical sector for job creation and the backbone of the UK economy which still overflows with untapped opportunity.
WE HAVE REGULATION AND COMPLIANCE ARE AT OUR CORE
We work with the FCA and HMRC to maintain more 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– this means 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 reduce fraud where we can, and therefore maximise investors returns and satisfaction.
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 migrate to a new payment provider which is expected to go live in early 2019, offering more investor benefits. 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.
WE GIVE ENTREPRENEURS MUCH MORE AND INVESTORS COMPLETE CONTROL
Businesses borrow from 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 DELIVER BETTER RETURNS THAN OUR COMPETITORS
Our returns are highly competitive: so far we have generated about £1.6m in interest for our investors who are lending at 10.46% APR, resulting in an average platform return of about 7.85% APR tax-free, after fees and bad debt. 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 £25m to 350 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.
WE NOW HAVE THE OPPORTUNITY TO CONTINUE THIS EXPONENTIAL GROWTH
Our aim is to lend £40m over the next year to continue our trajectory. We will expand our sales teams who are sourcing the deals for you to invest in and grow our community of active investors. Assuming we achieve our lending volume, Crowd2Fund will secure a valuation of £68m by the end of 2019. There are £2bn worth of deals annually available in the UK peer-to-business lending market, we simply need a bigger team and more technology to process these deals. There are potentially up to 13m people with an ISA in the UK, resulting in available liquidity of £480bn; therefore, market size is not the challenge and deeper penetration is our focus, especially given our superior proposition.
PLEASE JOIN US WITH OUR MISSION
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.
EIS TAX RELIEF
We applied to HMRC on the 4th of December 2018 for Enterprise Investment Scheme (EIS), which gives investors generous Income Tax Relief, exemption from Capital Gains Tax, and protection from potential losses for investors. We are currently waiting for Advance assurance and are confident it will be granted, investors have 2 years to claim EIS relief after making the investment. Our lawyers have confirmed they are optimistic that it will be granted soon and when granted we’re pleased to announce the previous 2017 Crowd2Fund equity campaign invesments will also be eligible for EIS tax relief. Due to the demand on timings and to not miss out on the IFISA season which runs from February to June we are progressing with the fundraising campaign and will grant EIS relief to shareholders when authorisation is achieved.
 These figures are accurate as of the 1st of November 2018. https://www.crowd2fund.com/fund-statistics
 These figures are based on our audited 2018 accounts, available for review
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A. We will be implementing zero-fees for the investors that qualify on 1st April 2019.
A. We are very confident we will be EIS authorised. We are un sure how long with will take. Because HMRC are taking longer to approve it does not necessarily mean we are less likely to be approved. We can be EIS approved well after the campaign has completed and you will still be able to receive the tax incentive for up to 2 years after making the investment.
A. We are hoping to enable this feature during 2019 however it is in early feasibility of development and we are unable to confirm that we will be able to allow this. We are confident however that it will be achievable for investors who invest £10k in this round.
A. If there is a significant economic slowdown then we are introducing a contingency fund to allow investors to share losses between themselves. This will of course yield lower interest rates. Brexit provides some challenges but also some opportunities and our SME community has not seen that much negative impact to date.
A. We are migrating our payment provider to an in house capability regardless of the HMRC warning and this will be completed over the next two months. The warning about the use of e-money has no impact to Crowd2Fund.
A. We are aiming for the £2m target, we do not have a minimum investment target and are confident we will achieve £2m.
A. Out of 350 loans that have been issued a relatively low amount of loans have gone into arrears or defaulted. We are continually improving our due diligence process in an ever changing marketplace. As part of the 2019 scope of work we will be building additional technology to further improve the credit checks and also provide more consistency across the due diligence and risk team.
A. We have recently improved the user experience on the Exchange allowing more filters for investors in addition to an improved iOS application. We are also looking at allowing our AI system to automatically purchase items from the Exchange where investment risk matches investors risk appetite. We keep a large number of investments available on the Exchange in case investors wish to diversify quickly. In terms of additional improvements to the platform, these are listed in detail in the business plan. A completely refreshed design across the platform will be implemented which includes a new look and feel and investor dashboard. One very exciting area of improvement will be a suite of recovery features and tool for investors to use to improve the process and effectiveness of recovering bad debt.
A. We are targeting £2,000,000 and are optimistic we will achieve this before the end of the campaign.
A. There is a lot more detail in the downloadable business plan in terms of the forecast and valuation. The target valuations are based on a 28 x revenue multiplier which is based on the performance of a competitor platform when they were at a similar stage to Crowd2Fund.
A. The management team currently have approx 33% of the company. This has been diluted from 50%. The management team are highly invested in the company after 5 years of hard work.
A. Existing investors we're invited to pre pledge their interest early and these investors were offered the exclusive early bird rewards however we extended this to all investors yesterday and any investor who is set to receive alerts about new investment alerts has been informed about the early bird offer which ends on Tuesday the 22nd of January 2019.
A. The rewards are exclusive to this investment round and zero fees for life is only available for investors who invest £20,000. If investors invest £10,000 before Tuesday 22nd January they will be be rewarded as part of the early bird offer with Zero fees for life. I hope this is clear.
A. The early bird investors are also available for existing shareholders. The Early Bird investments end on Tuesday the 22nd of January. There was a typo in the email with the end date of Early Bird rewards. Please accept our apologies. We will re confirm the end date to investors on Tuesday 22nd January.
A. Shares purchased through the platform are registered on the share register of C2F Nominees Limited which has ownership of the main company Crowd2Fund Limited. All investors are registered as part of this share register.
A. We did not end up accepting any institutional investment because we felt the company was not ready and we did not find the right investor for us.
We therefore have decided to focus on offering an amazing investor experience for individual, private investors. We are still seeking the right institutional investment partner who can help scale Crowd2Fund into a very large international business.
A. The minimum investment amount is £5,000.
A. There are 2 main audiences, investors and businesses. On the business side we are broadening the sales strategy to cover more acquisition channels including increased direct funding applications rather than referrals. This expanding sales team will be supported by very clear and targeted business marketing. The investor liquidity will grow through investor acquisition via direct markets and increased subscriptions on an annual basis as investors continue to invest with Crowd2Fund every year. There are 13m people with an ISA within the UK so the potential investor market is large however Crowd2Fund is specifically targeting more sophisticated investors seeking to build larger portfolios who can provide ample liquidity for businesses.
A. Investors who invested in the 2017 or 2019 round will be eligible for EIS tax relief when we get authorised.
A. We are aiming to go live this coming week. We have been gathering the last few pre pledges. The EIS is still awaiting approval from HMRC. Our legal team are very confident that we will achieve authorisation but are not sure how long it will take. We submitted the application on the 4th of December. We are going to progress with the campaign either way as we do not want to delay and miss out on the IFISA season which starts mid February and it is important for company growth. We can confirm that when we get authorised shares issued last year and this year will be eligible for EIS tax relief and you can claim for relief for up to 2 years after making the investment.
A. We only raised £1.2m in the last round rather than £10m. The company growth trajectory remains consistent with a 317% annual growth from 2017 to 2018. We are confident that after an additional £9m investment then this valuation would be achievable due to the market opportunity.
A. This is difficult to forecast as it depends on how many round we do to continue the growth trajectory.
A. The minimum investment is £5,000 currently.
A. Currently you will need to invest £15k to receive zero fees if you have invested £5k so far.
A. It is difficult to forecast longer term growth as there are many complex factored involved. In the shorter term though with the funds raised we believe we will be able to originate £40m in loans to 500 businesses and thus generate £2.4m in revenue. Based on a revenue multiplier model this would value the business at an estimated £68m. We believe we can achieve this volume by the end of 2019.
A. You would still get zero fees if you sell your investment, this however is subject to change.
A. This depends on timings. We applied to HMRC on the 6th of December 2018 for EIS Advanced Assurance. The indicative timings for a response is 4 weeks. HMRC are reviewing the application and we are awaiting a response. Currently it is likely the campaign will launch without EIS Advance Assurance. We are optimistic that we will achieve EIS authorisation however it may take some time to become approved. If we get EIS authorisation then the shares issued last year will also be eligible for tax relief.
A. Investors can sell shares at any point to another investor. We are aiming to introduce the ability to sell shares via the Crowd2Fund Exchange during 2019 however there are many technical and legal complexities to achieving this but we are optimistic. Please note Investing in early stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio.
A. We are planning to allow equity transfers on the Exchange in 2019. Currently the plan is to only allow Crowd2Fund equity investors who re-invest this round to make their shares transferable. This also assumes that the shares are not purchased through using EIS relief either as EIS shares are not transferable for 3 years. The ability to allow previous round investors to transfer shares on the Exchange is subject to change.
A. For this round we have fully submitted the EIS application to HRMC and argue that we are a technology company rather than a finance company as we are a platform. Many other platforms have been authorised for EIS. The EIS is pending and we are awaiting confirmation soon. We did not submit the more than standard EIS application to HMRC for the previous round however have invested in trying to achieve authorisation for this round given the significant investor benefits offered.
A. The business has been growing at least 300% year on year for the past 3 years. We plan to continue this growth. The losses are because we are continuing to invest in the growth of the business. The losses are also reasonably consistent even though the revenue is significantly increasing. The forecast valuations are based on a revenue multiplier that is benchmarked against our main competitor, when they were at our stage, who recently floated for around £1.5bn. There are more details available within the white paper.
A. It is difficult to forecast how many investment rounds we will do as it is dependent on the market opportunity, competitor activity and international businesses. Our aim is to build a very large and valuable businesses. Dilution only means that you own a lower overall percentage of the business however you still own the same number of shares, where their value will hopefully only continue to rise.
A. Our draft quarterly management accounts show £435,531.60 of revenue to the 18th October 2018 from 18th May 2018. Because of the Innovative Finance ISA we see a significant amount of our business conducted during the fist half of the year because of the financial year end being at the start of April. For the end of the next tax year we would like to achieve a minimum of £1.2m, a 50% uplift in 2018 revenue which we believe we can easily achieve. We can also boost revenue by taking a bond from a bank which we are currently undergoing due diligence for, however, deploying institutional money via the platform is not currently in line with our ethos. We are a platform for entrepreneurs, built by entrepreneurs. We aim to lend £40m over the next 12 months to generate £2.4m in revenue and value the business at £68m by the end of 2019 based on a 28x revenue multiplier valuation. I hope this answers your question.
A. The reward threshold for zero fees this round is £20,000. The reward is exclusive to the investment round so you would need to invest £20,000 to receive zero fees for life. I hope this answers your question.
A. The shares you purchased still hold their value at the higher valuation. Because we creating new shares your overall percentage ownership of the company will decrease, therefore if you wish to maintain your percentage ownership and avoid dilution you need to take part in this investment round. I hope this answers your question.
A. This investment round is specifically for investment into the Crowd2Fund platform. We do not lend to businesses from our balance sheet but act as a platform to allow investors to lend directly to fast growing UK businesses and earn attractive returns. I hope this answers your question.
A. We turn town a high number of business loan applications due to our high due diligence procedures. Overall we have 3120 business who have registered to our community and provided around 350 investment loans which is an 8.9% conversion. We have 4 acquisition channels for deal flow which are : 1) Direct registration, 2) Referrals, 3) Outbound sales leads and 4) Existing clients. The rejection rate varies depending on channels. There is more information available within the business plan.
We are activating new inbound deal flow acquisition channels to increase deal flow volume and also increasing the size of the team who process these deals. The market size in the UK is £2bn in deals for SMEs via non bank lending and with our more sophisticated proposition do not see the challenge to do with the market or proposition, but the in house capability of processing the deals. We can further streamline the processing time with more supporting technology.
The plan for next year is to increase the number of investors and businesses in our community. The business acquisition cost comes under our cost of sale. I hope this answers your questions.
A. Internationalisation of the Crowd2Fund business is a huge opportunity, especially given the new FinTech bridge to some markets which in theory makes it much easier to become regulated within markets who form part of the FinTech bridge. Australia and Canada are our initial target markets because of the FinTech bridge but also the high number of SME businesses within these markets. We will conduct specific investment rounds to source local investor partners for these businesses that will form an international group structure. I hope this answers your question.
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"Our revenue grows at least 317% year-on-year. Share in our success and invest today."
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.
Please see our risk section before making an investment decision.