Our Liquidity Model
6th September 2021
To date - and thanks to the expansion of our community - we’ve raised around £40,000,000 for entrepreneurs seeking investment to grow their businesses. Within our investor community we have a core set of around 2,500 active investors who hold active portfolios with us, continuing to subscribe and make new investments to grow and diversify their portfolios. More than half of these investors categorise themselves as sophisticated or high-net-worth investors and most invest through their Innovative Finance ISA, meaning their earnings from up to £20k per year are tax-free.
We have a comprehensive onboarding process which was introduced relatively recently. Now, nearly all investors have onboarded themselves via this new process which is more thorough than our previous onboarding journey. Some believed that putting a more rigorous process at the start of our onboarding journey would deter investors - we found that not to be the case. Investors, in fact, appreciate the thorough nature of the onboarding and feel more informed and secure. We plan to further enhance our onboarding process to make it less linear, introducing questions throughout the user experience through which completion will activate new features of the platform – thus further enhancing and personalising the investing experience per individual user.
Matching liquidity with opportunities is an ongoing challenge while the platform grows. We have a core set of investors who, throughout the year, have subscribed new capital to the platform to the sum of around £1,000,000. In addition to new capital, we have also received around £3,000,000 in repaid capital.
Crucially, to increase the capital on the platform, we have a very simple and measured approach and have optimised our online advertising. Online we can add capital into the platform at about a cost of £100 per £1000 of liquidity. This cost reduces the longer the capital remains in the platform. It costs us £300 in marketing to find an active investor who we can confidently expect to invest £6,000 per year, every year.
On the other side of our marketplace, for businesses seeking funding, we have a very simple measurement. It costs us £3,000 in online marketing to find a business that wishes to borrow £100,000, through which the platform then collects a £6,000 fee.
So when we balance our liquidity supply with our liquidity demand you can see how there is a clear and measurable strategy to scaling up the platform – especially when there is a huge market of businesses seeking capital and private investor capital available.
The key differentiator with Crowd2Fund is that the platform only facilitates private capital into businesses. We currently do not facilitate institutional capital and do not offer. This not only means that investors get to choose their investments and potentially earn higher returns, but also allows businesses to access private communities of sophisticated investors who can support their businesses over the longer term. This often leads to support for businesses for further rounds of funding and frequently we’ve seen investors become customers of the businesses they invest in.
As we scale, Crowd2Fund has phonemical potential to develop new sustainable credit models for new markets, all with a completely independent financial system not reliant on the legacy global banking system.
If you’d like to learn more about Crowd2Fund then please do get in touch.
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.