23rd April 2018
As the first IFISA regulated platform, and now having completed its second full year of operating the Innovative Finance ISA.
Crowd2Fund is rapidly establishing itself as the market leader. This is best indicated by the amount of IFISA funds held on the platform increasing 83% year-on-year by the end of the 2017/2018 tax year.
Picked as the first platform to be approved by the Government to roll out the IFISA, and who have never traded without being regulated, Crowd2Fund are able to share further impressive statistics into how the IFISA is being adopted by individual investors.
For example, the number of businesses to fund on the platform has increased by 145% in the same period, and more than 250 businesses and entrepreneurs have received fundraising via the platform.
Alongside these growth statistics, the company now has a clear proposition differentiated from IFISA competitors: they allow investors to directly choose the businesses they lend to, as opposed to applying the more common pooled funds approach. In addition, they also allow investors to access funds via the Exchange and give investors the chance to get rewards from the businesses they invest in.
IFISA Funds Up By 83%
Total IFISA funds held on the platform increased 83% year on year. Whilst 2016/17 was a relatively slow start for the entire IFISA market, it is encouraging to see an uplift in funds held being close to 100%.
This indicates that there is still a latent demand for the IFISA, which will likely increase in time due to the low returns offered by Cash ISAs and a volatile stock market, making Stocks and Shares ISAs less appealing.
IFISA Accounts Held
The total number of IFISA accounts held at the end of the 2017/18 tax year increased by 70%. This is inclusive of accounts held at the end of the 2016/17 tax year.
As this percentage increase of IFISA accounts held is slightly lower than the uplift in the Pound value of total IFISA funds (83% as detailed above), this suggests that account holders are investing more in their individual IFISA accounts.
This could represent investors being more optimistic at the prospect of returns from peer to peer investments on Crowd2Fund, and also due to zero defaults occurring during its first year of the product being offered.
Clear Rates of Return
Now that the platform has been established for more than three years, the returns are much clearer. Over 250 businesses have been funded with only one default, resulting in an average APR of 9.8% tax-free before fees and bad debt. Detailed figures of the Crowd2Fund loan book are due to published on the website soon.
An Explosion Of Activity On The Exchange
One of Crowd2Fund’s key differentiators is The Exchange, a secondary marketplace which allows buyers and sellers to transact IFISA qualifying loan parts with one another.
This allows for greater liquidity, meaning that IFISA investors have greater choice over the investments they make within their tax wrapper, as well as allowing the potential to sell some of their loans at a profit.
In 2017/18, activity on the Exchange increased by a staggering 750%. Investors are clearly seeing the benefit of being able to diversify their individual portfolios, alongside having the flexibility to pick from a wider range of businesses.
Exceeding Expectations With The APR
The average APR (before fees and bad debts) for all IFISA qualifying businesses in 2017/18 was 10.27%. This outstrips the average 9.32% APR from 2016/7, plus our advertised estimated APR of 8.7%.
This level of return is a testament to both the quality of businesses who fund on the platform, and the effectiveness of the due diligence procedures by the team.
Additionally, this level of return is higher than most other platforms because Crowd2Fund does not use institutional funds to help campaigns raise. As campaigns are not underwritten by these institutional investors, individual investors benefit.
During 2017/18, 113 IFISA qualifying businesses funded, a year-on-year increase of 145%.The number of IFISA investment opportunities covered a range of sectors including hospitality, media, and retail.
Campaigns on the platform included well-known brands (Ruroc and Planks) returning, as well as exciting consumer-facing businesses, such as Cubana, that funded for the first time.
The increasing range of primary IFISA opportunities on the platform is enabling investors to further diversify and build their portfolios.
Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.