equityEquity
Capital at risk
£638.09
Share price
3.0%
Equity share
Capital at risk
Ownership
Minimum investment is £5,000
Ownership share

We are offering an exclusive opportunity for our loyal investor community to own part of Crowd2Fund alongside a larger institutional raise. £1m of a £10m investment round is being made available for our platform investors. The investment is forecast to yield a 24 times investment return by 2022 after the company exits to a larger institution or floats on AIM. The firm has been growing exponentially during 2017 and Crowd2Fund are looking to seize the opportunity to accelerate growth in the rapidly expanding alternative finance sector globally.

The banking ecosystem is undergoing transformation and innovation like never before, and what we have seen is only the beginning

Crowd2Fund is a technology led, FCA regulated alternative finance company that is part of the wave of FinTech companies disrupting the legacy banking system. We offer a new generation of investments to pioneer a cultural shift away from traditional banking. Our peer-to-business lending platform provides fresh ways for British businesses to access finance. We find innovative businesses and connect them with likeminded investors, enabling them to grow by nurturing collaborative relationships.

The platform opened up investment opportunities to the global community in March 2016, and now allows investors from 163 markets worldwide to invest in British businesses. We achieved a world first by deploying the Mobile App on iOS, offering investors the opportunity to track their portfolios and make new investments direct from their Smartphones. To further strengthen our investor services, we now operate a secondary market called The Exchange, which offers liquidity on investments by facilitating the reselling of existing loans directly to other investors.

As of September 30th 2017 Crowd2Fund has facilitated £15m in investment to about 200 businesses, with an average of 9.58% APR return for investors, with zero defaults to date. All earnings for investors are tax free via the new Innovative Finance ISA tax incentive. The platform has been growing exponentially for the first half of this year at a rate of 28.5% month on month. We project we will facilitate £18m in loans and generate £1m per month in revenue by 2022, without the need for major investment. Crowd2Fund is operated by a small team with global ambitions. The opportunity exists to seize a significant portion of the UK SME funding market, currently worth £150m per month, or around £1.8bn per year.

The UK market is dominated by one main provider, and such dominance poses regulatory concerns. Capturing a significant share of this market is possible due to our more modern client proposition combined with our exceptional technology capability. This allows us to exploit the Innovative Finance ISA (IFISA) tax incentive to attract investors. Crowd2Fund is one of only a handful of sites authorised by the FCA to offer the Innovative Finance ISA, which gives us preferential access to £480bn of private investment funds. Our proposed high growth strategy involves three key strands: new investment in marketing resources, technology development and overseas expansion. Having proved the soundness of our approach we aim to become a global leader in peer-to-business lending within a few years. We have the core technical and commercial skills to launch the second phase of expansion and will build the teams necessary to complete it.

We have designed our client proposition and technology platform to meet the specific opportunities available to UK investors. Our business clients can access their funds and, importantly, leverage the benefits of working directly with a community of private investors who choose their individual investments, rather than using pooled or institutional funds. This highly successful approach is replicated in our plans to create a new phase of growth. We will enter new geographical markets and launch appropriately tailored versions of the platform.

We will set the local and regional standards by working with the authorities to obtain the respective regulatory approvals. By building a fairer, more accessible global financial system, we aim to deliver generous returns on investments, whilst helping to strengthen the world economy from within. We believe that investment should be more than just financial. Our aim is to build and nurture long term relationships between our investor communities and the businesses that are funded.

Key Performance Indicators

Crowd2Fund began its rapid expansion in early 2016 following an 18 month commissioning and testing period. It achieved positive cash flow in early 2017 following a surge of interest which has been growing ever since. This rapid growth is due to the continuous improvement of the product offering, customer service and the increasing attractiveness of the platform to both businesses and investors.

Having successfully navigated the “valley of death”, liquidity is no longer a problem. The main challenge to growth is the rate at which new business opportunities can be identified, reviewed and listed. This limitation is being addressed through a combination of modest staff recruitment and further process automation, and should enable continued month-on-month growth to achieve £1m per month revenues on monthly transactions of £18m by 2022, with no significant further investment, valuing the company at £336m.

Investment Offering

Crowd2Fund sees a once-in-a-lifetime opportunity for its transformation into a main player in its niche market, by making strategic investments in its marketing resources and its technology platform, and by internationalising its operations.

We are seeking a long term institutional investment partner to support the growth of the UK business and also to penetrate new, international markets, including the USA and South East Asia. A £30m investment is sought following the Series A £2m investment that completed in May 2015. This Series B investment will be split into 2 tranches; one of £10m, to be completed in January 2018, followed by another £20m to be completed in January 2019.

The valuation for each tranche is benchmarked against the market valuations. Competitors are valued at 28 times the company revenue. In April 2015, one competitor were generating £35m revenue and valued at £1bn; Crowd2Fund is currently generating £1.2m revenue per year. Based on this benchmark, the pre-investment valuation as of January 2018 will be £32m.

After the £10m investment in January 2018, the revenue will increase to £11m per year by January 2019, valuing the company at £308m. The second £20m tranche would be completed at this valuation. After growing to capture 30% of the UK market the platform will be transacting £49m per month, generating £34m in revenues per year, valuing the company at £1bn thus offering a 24 times return on investment by 2022. This forecast assumes that the market does not grow any further from todays market size of £1.8bn. Some sources estimate the UK peer-to-business market could grow 45% CAGR per year to £8.3bn per year by 2022. Based on this, only a 7.2% of the UK market share is required by 2022 to achieve revenue targets and value Crowd2Fund at £1bn.

X

Equity - product type
Raised
£ 1.20m
Investors
121

Where will the funds go?

Technology Development
£161,300
Risk & Credit
£41,900
Business Development
£41,000
Compliance
£42,000
Legal & Accounting
£40,000
Security
£25,000
Direct Sales
£593,800
Media
£432,500
USA set-up
£150,000
Singapore set-up
£50,000

Key people

Chris Hancock
Founder & CEO
Nicky Pace
Managing Director
Azos Rashid
Non Executive Director of Private Wealth
Grace Huang
Non Executive Director of Institutional Funds
Navdeep Arora
Non Executive Director of Credit
John Daniell
Independent Strategic Advisor
Lee McDermott
Director of Mobile
David Garcia
Director of Tech Development
Liviu Dragulin
Director of Tech Ops
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Investor rewards

Quarterly report & smart-coin

If you invest £5,000 - £10,000
Receive a quarterly business and industry report, and special edition Crowd2Fund smart coin.

0% Investor Fees for Life

If you invest £10,000 - £50,000
Receive a quarterly business and industry report, and special edition Crowd2Fund smart coin. Never pay platform fees again.

Exclusive Investor Club

If you invest £50,000 - £100,000
Become part of our Exclusive Investor Club and access special events and industry insights.

Advisory board member

If you invest £100,000 - £1,000,000
Become a member of our advisory panel and help shape the future of the alternative finance industry globally

Got a question for the business?

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A. There are several potential options for the sale of the business. We have been conducting initial research to explore these. We have a number of relationships with potential companies we can sell to and understand the importance of planning the company exit well before the event. We are well advised from experienced individuals in this area.

A. The estimated return is 24 x return on investment and is based on both the continued growth of the FinTech sector and Crowd2Fund's continued exponential growth. We aim to seize between 7.2% - 30% of UK market share in the peer to business lending space that we believe has limited competition due to one major player owning 87% of market share. I hope this is clear.

A. Yes thats no problem, and your total value invested across all tranches will qualify you for your investor reward

A. The shares will be transferable so you can sell them at any time if you find a buyer. The shares will be offered to other investors first at the sale price. This will not be possible on the Exchange, we may implement the ability to transfer shares on the platform at some point in the future. The current plan will be to float the company on AIM or sell to a larger institution. We will be able to provide annual updates on valuation using the current methodology.

A. We are not restricted to offering any particular loan type however are flexible based on market demand. We do plan to offer more lower risk, property secured investments going forwards offering interest rates at 6% - 8% APR. Securing investments is a good idea but will also mean a lower APR.

A. We know many VCs and have been having ongoing conversations with the view to focus on the VC raise in the new year leveraging existing relationships but also establishing new ones. The loan which is suspected identity theft should be covered by our insurers however in the unlikely case it is not Crowd2Fund will cover the loan to ensure there are no investor losses.

A. We have restricted the sale of the loan on the Exchange as it is suspected identity theft and we are working with the authorities and our insurers currently before we are able to provide additional detail. The loan will nevertheless be covered by Crowd2Fund or our insurers. We have improved our suspected fraud prevention processes and will continue to do so as part of our scope of work next year.

A. We currently have a 0% default rate and 100% bad debt recovery rate. There are 5 loans in the recovery process which we are very confident we can recover based on our legal right to seize the assets of the businesses and directors. We are confident we can achieve this. The recovery process does take time to complete and investors should expect a 1% - 2% bad debt rate even though we aim for 0% bad debt. Maintaining low defaults and world class due diligence is a key priority of the business.

A. We are currently focused on the initial £1m raise without platform investors and have a number of VC meetings scheduled for January. We are looking invite 3 institutions with the correct experience and geographical coverage to take part in the remaining £9m.

A. This is an area of interest however we believe the use of cryptocurrency will offer little value to us as a business and also risk becoming in breach of our regulatory obligations.

A. When you make the investment it will automatically be invested outside your IFISA.

A. There are 4 loans in arrears of 197 and to date we have a 100% recovery rate for loans that are in arrears. We treat possible defaults and late repayments with the highest priority and plan to maintain this track outstanding record.

A. We have issued 197 loans, 4 loans in arrears, 0 defaults, and have a 100% recovery rate so far for loans in arrears.

A. The cost breakdown about includes the cost of sale or 'direct sales' which will be taken from company revenue that is generated rather than investment capital. We felt it was relevant to show this within the costs.

A. This error message will appear the iOS App if you haven't yet completed the Equity test or if you haven't passed the test. We suggest you complete the test on our website while we review with our Mobile team whether the test is available on the iOS App.

A. The investment will be outside your IFISA. The share price will not be affected by dilution, just your percentage ownership of the company.

A. Shares cannot be sold on the Exchange currently.

A. This is not a loan, this investment is an equity investment and you will own a share in the Crowd2Fund platform.

A. It will not reduce the total potential subscription amount of £20k for this year's IFISA. However, if you invest funds that are in your wallet and have already subscribed your subscription amount, this will be reduced, but the value of your investment will be treated as a withdrawal.

A. Shares cannot be sold on the Exchange currently.

A. Shares cannot be sold on the Exchange currently.

A. This investment will not be part of your IFISA and is not currently EIS eligible.

A. A team consisting of a business funding advisor and risk analyst can process 15 deals per month. Increasing this team size and internal supporting technology to ensure a smooth review and listing process will significantly allow us to transact the number of target deals. The constraint is not investors or number of deals available, but the operational team size and technology to review and list the deals.

A. The campaign will not be EIS approved due to the constraints that are placed on a business. It is more difficult and expensive to get EIS approved as a finance company. You should invest on the assumption that it is not an EIS opportunity currently.

A. This is correct: if you pledge at least £10k, you will pay no investor fees, currently the 1% platform fee for life.

A. We are currently looking into whether the campaign is eligible for EIS. The company is not currently EIS approved. You will be informed before the campaign completes if the investment is EIS eligible.

A. We have extensive marketing knowledge within the team. A significant part of the budget will be spent on content creation, social media, and very tightly controlled and measured campaigns. There will be no vanity marketing.

A. This is correct: if you pledge at least £10k, you will pay no investor fees, currently the 1% platform fee for life.

A. An investment in this campaign will sit outside your IFISA wrapper. The funds will automatically be deducted from your subscription this year.

A. We plan to start the fundraising over the next week or so. We will update the ‘where will the funds go’ table to reflect specifically the crowdfunding £1m and thus exclude the institutional funds. The media budget includes digital marketing and creation of communication assets, such as our Android app and video content. All marketing will be tightly controlled.

A. We are expecting to record annual breakeven by the end of this tax year in April on our statutory accounts. It fluctuates each month, but we often have profitable months. Our burn rate is about £70k per month and we often surpass this in terms of revenue.

A. I don’t believe this is possible, unfortunately; however, we are looking to become EIS eligible, which would mean that there is an EIS tax relieve on the investment. We will inform you if this is approved. The investment is not currently EIS approved.

A. The current market size is £150m per month. We believe that we can seize 30% of the market which is £50m per month or £3m revenue per month. This would be £36m in revenue per year, resulting in EBITDA of an estimated £9m per year. Detained financial forecasts will be available within the business plan. However, some people forecast that the industry will grow at 42% CAGR to 8.2bn per year. If so, only 7.2% of market share is required to reach an EBITDA of £9m per year.

A. Since year end in April 2017, in the past 6 months until November 2017, Crowd2Fund have generated £285k in revenue, meaning 100% growth on last year - assuming we don’t grow and generate the same revenue in the next 6 months. Our growth period, however, is from January to June, which is when most people complete their IFISAs and our target revenue for year end in April 2018 will be £1,219m.

A. To date £2.55m has been invested in building, testing and launching the platform. This investment is shown as losses and are correct within the historic profit and loss. After this next round of investment further losses will be expected until 2022 where the target valuation of the company will be £1bn after significant further investment.

A. The focus for the business is growth within the UK market however by becoming compliant and localising the technology within the US allows us to firstly solicit investment from US investors and then start funding US businesses. If we just get compliant and prepare the technology as a first phase it will make the UK/global business more attractive as an acquisition. We plan however to launch the business in the US market without losing focus on the UK market with the view to increase revenue.

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Business brand

London, UK

"The banking ecosystem is undergoing transformation and innovation like never before, and what we have seen is only the beginning"

Business stage
Expansion
Incorporated
5 years, 3 months
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