equityEquity
Capital at risk
£33.0m
Valuation
3.0%
Equity share
Capital at risk
Amount
£
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 to 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
Maximum
£ 1m
Raised
£ 136k
Investors
14
Estimated close date
42d 15h

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
Head of Marketing
Azos Rashid
Non Executive Director of Private Wealth
Grace Huang
Non Executive Director of Institutional Funds
Navdeep Arora
Non Executive Director of Credit
John Daniel
Independant 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. 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 loosing focus on the UK market with the view to increase revenue.

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. 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 when most people complete their IFISAs and our target revenue for year end in April 2018 will be £1,219m.

A. The current market size is £150m per month. We believe 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. Some people however forecast 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. 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. We are expecting to record annual breakeven by the end of this tax year in April on our statutory accounts. It fluctuates month on 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. 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. An investment in this campaign will sit outside your IFISA wrapper. The funds will automatically be deducted from your subscription this year.

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

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. We are currently looking into if 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. This is correct, if you pledge at least £10k then you will pay no investor fees, currently the 1% platform fee for life.

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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
4 years, 7 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