Crowdfunding platform Crowd2Fund had a record-breaking start to the year, seeing exponential growth of 4,700 percent in the first quarter of 2017.
The platform now transacts millions of pounds of funds on a monthly basis, maintaining the company’s record to date of zero defaults by funded businesses.
Crowd2Fund raised debt crowdfunding finance for scores of different businesses throughout the quarter, within sectors including hospitality, real estate, and recruitment. The number of businesses receiving funding in the first quarter increased by 3900 percent on the same quarter last year.
The platform is experiencing a 50 percent month on month growth rate, with its popularity coming in part for its ability to offer the Innovative Finance ISA. The last few months have seen an accelerated uptake of the product, with the expectation that this demand will continue with the ISA allowance having been raised from £15,240 in 2016/17 to £20,000 in 2017/18.
95 percent of investments are now made into this product, despite sceptics dubbing the project a “damp squib” in the wake of its release.
Total funds raised
The total funds raised on the platform in Q1 is up a staggering 4700 percent year on year, benefitting from a flummox of new investors showing the propensity to increase their size of investment into each individual campaign.
Another factor likely to have increased the total number of funds raised is the drop in interest rates to 0.25 percent, announced by the Bank of England in August last year.
Registered users on the platform increased by 236 percent, with 75 percent of these being investors and the other 25 percent being business users. The figures are encouraging, showing that the demand for debt crowdfunding and the IFISA is no longer latent and that users have begun deploying funds soon after registrations as opposed to just signing up out of curiosity.
The success of Norman Rogers, a fish and chip business based in Grimsby, proves that debt crowdfunding is a viable financing option for more traditional businesses based outside of London. The fish and chip wholesaler reached their funding target of £50,000 in just over a week.
Hospitality and leisure businesses have continued to perform well, due to them being easy to understand for everyday investors. The successes of Micro Fitness Ltd and Ashburton Cookery School indicate that the SME economy is moving towards being more experience led.
Little Pickers, a supplier of hospitality services to the music industry, funded in just over two days despite being a relatively curveball proposition for most investors.
Campaigns are closing faster
Campaigns are now funding in a matter of days, rather than weeks – notably, 36&5 raised £90,000 in just a few hours. As a result of this many businesses are increasing their funding requirements in order to accommodate for increased demand from investors, as well as to allow themselves extra finance to grow their businesses.
 3900% represents growth of the total number of businesses funding in Q1 2017 vs Q1 2017. 4700% represent the total growth of funds transacted on the platform in Q1 2017 vs Q1 2017