Two weeks ago, crowdfunding platform Crowd2Fund launched The Exchange, an online marketplace allowing investors to trade Crowd2Fund investments. Since then the platform has seen a flurry of activity and the successful completion of its first trades, which have earned investors an otherwise unobtainable premium on investments and given sellers early access to their cash.
Put simply, the platform allows those who hold debt or equity crowdfunding investments from Crowd2Fund to re-sell them to another investor. One of the first trades on the platform was for a Hummus Bros Mini Bond investment, which sold at a 10% APR coupon; a 2% premium on the initial offer of 8% APR.
Chris Hancock, CEO of Crowd2Fund, says:
“In our opinion the current system is overly restrictive. Individuals who need access to their capital needn’t be tied into their investments and if a central exchange was developed it would radically increase the liquidity into ‘the real economy’ providing a much needed boost.
“It is arguable that more widespread and transparent trading of individual debt investments, could have avoided the financial crisis – by allowing individuals to trade debt investments openly we would have avoided the sub prime debt and credit default swaps being conducted by the banks, which ultimately resulted in the crash.“
Currently Crowd2Fund only perform match trading on the Exchange, which is far less complex than operating a full exchange and bidding system. However, it is something that The Exchange are looking to introduce in the near future; sellers will be able to set a reserve and potential investors will be able to bid on an item, with the highest price winning the bid.
The market’s initial positive response to the platform suggests that The Exchange will become an important part of the future of crowdfunding, eliminating a liquidity problem that puts many off investing in the sector. Ultimately, this will lead to providing more capital for businesses who create jobs and are significantly important to support overall economic growth. For further information and to take a look at the investments available on The Exchange, visit their website here.
Miranda Wadham on 26/10/2015