27th July 2022
After two years of Covid, the Crowd2Fund secondary market, or Small Business Exchange, has just opened. This is a game-changer for investors on our platform as it enables them to diversify their portfolio and exit their investments.
On Crowd2Fund, the demand for liquidity from investors has grown around 15% month on month and is at its highest level since mid-August 2019. The re-opening of a secondary market helps us respond to this higher demand for liquidity and gives investors increased flexibility while offering the same higher interest rates of around 15% tax-free via the Innovative Finance ISA. The soft launch will include some restrictions on the types and riskiness of businesses listed.
With the help from our team and partners we have created a unique secondary market experience for entrepreneurial investors wishing to trade within the small business sector.
The Crowd2Fund Small Business Exchange gives investors in businesses the ability to list an investment, define the sale price and sell the investment to another registered investor. Investors undertake a short questionnaire so they understand how the exchange works and the risks of trading on a marketplace.
With both compliance and investor security a key consideration, the new Exchange features an enhanced due diligence and pricing system. This ensures that bad loans cannot be listed and both buyers and sellers receive a fair price based on the purchase.
Even though the platform sets the initial price, the investors can make adjustments to incentivise a sale. To help sellers define a fair sale price, and make sure the risk relates to the reward, our system measures the business performance since the loan was first issued. Several variables are measured such as Equifax score and most recent financials to adjust the floor price up or down based on recent performance. Investors retain control and can set the price between the floor and ceiling – allowing you to trade.
In addition, every listing is reviewed and manually approved by our team. This should give buyers further reassurance that the investment is sound and the price offered reflects the associated risks.
Another modification is an increase to the amount of business information made available to an investor. On the campaign page, a financial health section had been added, along with the most recent company accounts. The most recent Equifax score for the business is also shown to help investors judge the performance of a loan and if a fair price is being offered.
The Exchange will be opened as a pilot scheme with more recent loans, with a lower risk grading, offered initially. At the next stage, listings available will be extended to all good loans and businesses.
Chris Hancock, Founder and CEO, said:
“This is a monumental milestone we will continue to build on and expand during this initial trial period. The potential of a small business Exchange to provide liquidity and investment to businesses up and down the country is huge and we hope to continue its expansion in collaboration with our brilliant investor community.”
We believe the Small Business Exchange has vast potential as it increases flexibility for investors and boosts capital available for entrepreneurs around the world.
For more information about the Exchange visit:
Past performance and forecasts are not reliable indicators of future results. Tax treatment of any of the investment offers will depend on the individual circumstances of each investor and may be subject to change in the future. If you are unsure about any aspect of the information provided by the company, you should seek advice from an independent financial adviser. Do not invest more than you can afford to lose. Investing in start-ups and 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. Investing in start-ups may expose the individual concerned to a significant risk of losing all of the money or other assets invested. Peer-to-business lending through Crowd2Fund is not the same as holding a bank or building society savings account. When making a peer-to-business loan, your capital lent to a borrower is not covered for compensation in the event of a loss by the Financial Services Compensation Scheme. It may prove impossible to recover all or part of the loan by calling in the business assets held as security on that loan. Reward and Donation funding types are not regulated by the Financial Conduct Authority Crowd2Fund Limited is authorised and regulated by the Financial Conduct Authority (FRN 623683). Crowd2Fund Limited is registered in England and Wales. Registered No. 08472687 Registered Address: 242 Acklam Road, London, W10 5JJ
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.