Crowdfunding platform Crowd2Fund have given its loyal platform investors the opportunity to get involved in its latest fundraising round, beginning with an exclusive offer to take part in an initial £1 million offering.
Demand from its platform investors was so high that the initial offering was overfunded to £1.5 million, and more shares were issued to avoid disappointment.The platform are aiming to raise another £30 million in total.
The equity offering was snapped up quickly and the firm believe it is a great way to stay true to their principles and build an investor team who will propagate the Crowd2Fund brand within their communities and networks.
The technology firm is now inviting investors to take part in a further £8.5 million equity tranche from a few carefully selected large investors who can bring skills and market knowledge. The aim is to close the next tranche before the end of this tax year, following the initial £1.5m which now takes the total investment to £4m since the business started in 2014.
The scale-up company believes there is little competition in the peer-to-business lending market, which is currently dominated by one major platform. There is also significant opportunity overseas which the company wants to harness. It is planned that the final £20 million of the £30 million raise will be completed in January 2019.
The UK peer-to-business market opportunity is tipped to be worth £8.3 billion per year by 2022. The current market size is approximately £1.8bn per year, or £150m per month in money lent. The platform believes it is achievable to seize at least 33% market share by offering a much stronger, more genuine customer proposition than anything currently available, thus targeting a minimum £1bn valuation within a short period of time.
Millions lent to hundreds of innovative growing businesses
Crowd2Fund was first launched in 2014, and quickly became one of the few crowdfunding platforms to be directly regulated by the FCA and to offer the new Innovative Finance ISA.
Unlike a number of competitors within the peer-to-business lending space, Crowd2Fund allows investors to directly choose the businesses which they lend to, provides more information on investments, and investors can even get rewards from investing in interesting businesses.
To date, the company has facilitated more than £15 million of investment to over 200 businesses, generating an average 8.7% APR return for investors before fees and bad debt. There have been no formal defaults after more than 3 years of trading. There are a handful of loans in arrears, however, the firm have 100% successfully recovered all funds so far from arrears.
Crowd2Fund was the first provider in the UK to be approved by HMRC to roll out the Innovative Finance ISA (IFISA), and are still one of just a handful of platforms to be able to offer this highly efficient tax incentive to their investor base.
Future Growth, internationalisation and exit plans
Crowd2Fund is now securing their next tranche of £8.5 million which will be used to grow the UK market. Furthermore, operations will also be set-up in the USA and South-East Asia, where the platform will be leveraging the new FinTech bridge which allows easy pass porting into these markets.
Funds will also be used to continue to deliver a world class user experience and minimise operational cost by embracing automation and artificial intelligence.
Founder and CEO Chris Hancock says:
“The banking ecosystem is undergoing transformation and innovation like never before; what we have seen so far is only the beginning. We are planning to exit the company in 2022, with revenues of £34 million and a valuation of at least £1 billion. In order to reach this target Crowd2Fund would only need to capture 7.2% of the UK market, excluding international activity. “
