Crowd2Fund Statistics

(*statistics are correct at time of publication 06/16)

Returns/rates

Estimated (minimum APR)

Donations: 0% APR

Loans: 6% APR

Revenue: 10% APR

Bonds: 8% APR

Equities: SEIS/EIS eligibility

Performance

Arrears

There have been no late payments across Crowd2Fund’s platform, to-date.

Historic default rate

Crowd2Fund has a 0% default rate, since the platform formed in 2014.

Estimated default rate 2016

Crowd2Fund have an estimated default rate of 0.5% for 2016.

Crowd2Fund liquidity

Total lent funds to-date

£4million have been lent across Crowd2Fund since the platform formed in January 2014.

Loan purpose

You can lend to British businesses, seeking various types of financing — predominantly debt and equity loans.

Crowd2Fund’s loan range is between £10,000 and £500,000.

If you view Crowd2Fund’s six current investment ‘Opportunities’, you’ll notice they range from £10k — £150k and are split between ‘Loan’, ‘Revenue Loan’ and ‘Equity’.

Looking at Crowd2Fund’s success stories, you’ll see they’ve arranged equity loans for as little as £17k and as large as £502k, and debt-based loans from £25k up to £175k.

Geographical spread

Crowd2Fund vet and list British businesses seeking financing, typically in Southern England, but with opportunities spread across Great Britain.

Geographical spread of current investment opportunities (correct at time of publication):

London — 4

Scotland — 1

Wales — 1

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Crowd2Fund Security

Crowd2Fund assess each and every investment opportunity on a case-by-case basis, ensuring all due diligence, underwriting processes and risk assessments are executed prior to approving and listing loan opportunities.

Due diligence

Directors related to an applicant business are vetted thoroughly by Crowd2Fund. They undergo background checks for identity, fraud, businesses bankruptcy, linked businesses, county court judgements, and credit history.

Things that will put an application into immediate decline:

1. Any director or shareholder with over 10% shareholding in the business who is currently bankrupt or has been declared as such within the past 10 years.
2. Any director who was also a director of a business which failed with unpaid debts, or was part of a business in the same industry which failed, in the past 5 years.
3. The business applying for the loan has an unpaid County Court Judgement in excess of £500 or has a track record of judgements without satisfactory justification.

Financial assessment

The underwriting team at Crowd2Fund assess businesses applying for debt-based funding, (loan, revenue lending or mini-bonds) primarily assessing cashflows to understand the company’s capability in repaying the loan.

Crowd2Fund expects a minimum threshold of cash-cover for repayments, in the region 1.25:1

Length of time in business plus the strength of the directorship are also considered when reviewing loan applications.

Personal guarantee

Despite Crowd2Fund professing ‘security’ is no substitute for a business’s ability to repay debt, it should give you some comfort that security is taken, generally, on each loan.

Crowd2Fund takes security in the form of personal guarantees (accepted for loans up to £100k), floating or potentially fixed asset charges.

Chris Hancock, Founder and CEO, informed Orca that 95% of loans have been director guaranteed.

Diversification

Crowd2Fund offers you the opportunity to manually select loans, thus building your own portfolio of investments: bonds, loans, revenue lending and equity. You are responsible for bearing the risk when pricing and investing in debt-based loans. Crowd2Fund’s risk grading does not apply to debt instruments.

Smart Investment

Crowd2Fund will also be launching an auto-diversification function, although not in the typical fashion as seen with the likes of Zopa, RateSetter and Funding Circle. With Crowd2Fund’s Smart Investment system (coming soon), you can opt for ongoing investments to be spread amongst available opportunities by Crowd2Fund. You will be required to input a number of criteria, such as risk appetite, as well as your desired APR (% return) to determine in which opportunities your capital will be spread.

Risk grading (not for debt investments)

Crowd2Fund risk grade certain investment opportunities for the benefit of platform users. You should be conscious that risk grades are NOT assigned to debt-based investments (loan, revenue lending or bonds).

Crowd2Fund Company History and Team

Crowd2Fund was established in 2014 by Chris Hancock. The platform was created to capitalise on the breakdown in bank lending and the lack of opportunity afforded to UK investors and savers to earn high-yield returns, and create smart, diversified portfolios.

Chris Hancock, Founder/CEO

Chris has a wealth of experience in delivering digital projects in various industries. He worked for HSBC delivering their digital global marketing platform prior to founding Crowd2Fund.

Navdeep Arora, Director of Risks & Operations

Navdeep worked at Merchant Money Ltd as their Chief Risk Officer prior to joining Crowd2Fund in October 2015.

As well as accomplished members leading Operations, Technical and Marketing Crowd2Fund has a board of reputable Advisors, including Nigel Webber, Ex-Global Chief Investment Officer at HSBC Private Bank.

Crowd2Fund Products & Returns

Donation

Lowest risk & return, this product allows you to invest in great causes with possible tangible returns, but no guarantee you will receive anything (other than a good feeling!).

Lending

Crowd2Fund’s monthly repayment loans mean you will receive fixed interest and some capital each month, reducing the risk of losing significant amounts of money from your portfolio.

Bonds

Generally offered to businesses funding specific projects, these offer interest only and repayment upon term maturity. This means there’s greater risk that you lose money in a default.

Revenue

Crowd2Fund’s Revenue Loan investments are typically offered to early-stage, high growth companies, where the businesses have greater flexibility in repayments compared to standard loans as repayments are made as percentage of monthly turnover.

Equity

The riskiest asset class offered by Crowd2Fund is equity investments, where you can buy a stake in the company and earn higher returns if the company is successful. Tax incentives such as EIS/SEIS are available to offset some of the risk.

Exchange

Investors who want their investment back before the end date may sell their investment on Crowd2Fund’s Exchange platform. You choose the amount at which you want to sell the equity or the remaining loan, letting other investors the chance to return liquidity to you and take on your earnings henceforth.

Crowd2Fund Innovative Finance ISA (IFISA)

The new Innovative Finance ISA, launched 6th April 2016, gives you the opportunity to invest in a Crowd2Fund debt-based product, shielding the interest earned from tax. It follows similar rules to traditional ISAs, but has some specific alterations due to the relative complexity of peer-to-peer lending. Find out more clicking here.

Crowd2Fund are one of very few peer-to-peer platforms capable of offering the IFISA, due to being fully regulated by the FCA and being granted permissions by the HMRC. This is an excellent opportunity for savers and investors to take their first steps into P2P lending, earning a high interest rate and as a bonus not being taxed on the earnings.

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Crowd2Fund Investment Portfolio

Crowd2Fund does well to explain the risks involved when investing: ‘Investments may offer attractive returns, but there’s always a chance you could lose your capital. We recommend that you invest in a number of businesses to spread your risk.’

What’s more, Crowd2Fund are soon launching ‘Smart Investment’. This will ensure investors who seek to fund future loans can have their capital auto-diversified between a number of suitable investments, as determined by the criteria of your personal Crowd2Fund profile.

Criteria to be filled in, include:

1. Investment strategy

a) Level of investment knowledge (weighted 1 to 5 low to high)

b) Your liquid assets/worth (£)

c) Your risk appetite (weighted 1 to 5 low to high)

2. Sectors of interest

Sectors range from consumer products to food & drink to IT and telecoms and in-between.

3. Preferred investment types

Equity, Lending, Revenue Loan, Donations, Crowdbond

4. Intended yearly investments

New investments value: less than £1k to over £1m

Number of new investments: 1 to more than 10

Crowd2Fund Fee Structure

Crowd2Fund take a management fee of 1% from repayments to investors. This means you are only charged when you are successfully repaid.

Risks Investing in Crowd2Fund

There’s always a risk when investing, in anything. With peer-to-peer lending you are not covered by the FSCS. There’s a risk you could lose all your money. Crowd2Fund has a 0% default rate with no late payments on loans, to-date. The risk with investing in these sorts of debt-based products, offered by Crowd2Fund, is largely to do with your ability to select loans and build a portfolio.

Multiple product options

Crowd2Fund’s ‘Revenue’ and ‘Lending’ debt-based investments are the only products that pertain to peer-to-peer lending. Therefore, you may feel confused by the other products on offer.

Manual loan selection

With any manual loan it is your responsibility as the investor to fully assess the risk. Take comfort in the diligence and underwriting processes employed by Crowd2Fund prior to approving and listing loans. Be conscious, however, that despite there being no history of late payments or defaults, manual loans still bear risk: the risk that you don’t adequately assess them correctly.

Conclusion

Crowd2Fund offers a diverse product range, catering to various types of investors, from the philanthropic donator to the more experienced equity investor. They are making big steps in debt-based investments (peer-to-peer lending) by being one of few peer-to-peer lending platforms capable of offering the Innovative Finance ISA as well as including such features as Investment Portfolios and their Exchange service. Crowd2Fund is certainly one to watch in the peer-to-peer lending UK space. A good team, with a user-focused platform and interesting future ahead.