Miranda Wadham on 05/08/2015
What does Fintech 2020 mean for bitcoin?
The UK has been leading the way with the fintech revolution, creating enough new technology companies to rival Silicon Valley. Increasingly, it looks as if Britain’s booming technology industry goes hand in hand with cryptocurrencies; but while the future looks bright for fintech, what does it hold for bitcoin?
The UK government have loosely given their stance on digital currencies, with the last government making a statement just before the election that they “intend to apply anti-money laundering regulation to digital currency exchanges in the UK, to support innovation and prevent criminal use”.
This positive stance has been reinforced by the current government; on David Cameron’s first trade mission since re-election in South East Asia, he brought a significant delegation of fintech firms – as well as, surprisingly, the British bitcoin company Blockchain. Bringing a bitcoin company to a trade mission is yet another sign that the U.K. wants to play an important role when it comes to welcoming bitcoin startups and becoming a bitcoin hub.
Chancellor George Osborne has also spoken in favour of cryptocurrencies are part of the UK’s financial future.
“These alternative payment systems are popular because they are quick, cheap, and convenient – and I want to see whether we can make more use of them for the benefit of the U.K. economy and British consumers. With the right backing from the government, I believe we can make London the Fintech capital of the world.”
One thing that is clear is that the government is likely to move towards regulating bitcoin. Regulation will initially apply to exchanges, which trade fiat and digital currencies, and include ‘know-your-customer’ requirements that will make bitcoin less anonymous. Existing anti-money laundering frameworks are likely to be used are law enforcement will likely have the ability to confiscate bitcoin used for criminal purposes.
Blockchain is the world’s most popular Bitcoin wallet, and home to the most widely used Bitcoin APIs; it is recognized as the strongest, most trusted brand in Bitcoin. Nicolas Cary, Blockchain co-founder, is optimistic about the future of bitcoin in the UK:
“London has been the home of financial innovation for hundreds of years. It would be a historical mistake not to make this the home of digital currencies. There’s an incredible amount of talent and experience here.”
FinTech 2020, the initiative started by George Osborne and the London mayor Boris Johnson, is aiming to challenge the status quo and attract a large number of financial technology companies to the country. These recent events have shown that digital currencies may well be integral to the UK’s leading position in fintech – however, plans for regulation may put that in danger.
Government officials drafting bitcoin regulation would do well to keep an eye on the progress of recent attempts to regulate crytocurrency in New York.The state’s regulator announced finalised plans last month for a BitLicense, needed for all digital currency companies operating in the area. It has been criticised for being too restrictive; for example, the “the identity and physical addresses of the parties involved, the amount or value of the transaction, including in what denomination purchased, sold, or transferred, the method of payment, the date(s) on which the transaction was initiated and completed, and a description of the transaction” is required for every transaction, which somewhat negates the whole point of using cryptocurrency.
Adam Draper, CEO of Boost VC, heavily criticised the proposals, stating: “The rules don’t include a significantly flexible on-ramp for small startups to build and innovate their products, killing potentially disruptive technology before it can even start.”
He also estimates that the cost of compliance for a startup is $2m, making using the currency prohibitive for the young start-up companies it is designed to benefit.
If the UK government truly wishes to “create a world-leading environment”, it would make sense for it to monitor closely the impact that the BitLicense has on US companies. Regulation of Bitcoin seems inevitable – but whether it will help on hinder the industry remains to be seen.
Travel app Peopletrip seeks investors on Seedrs
Based in London’s tech hub, Silicon Roundabout, the Peopletrip app is a brand new platform hoping to help travellers simplify their lives.
The aims of the app are twofold. Firstly, to make travel planning easier and quicker, without having to spend hours online or buying expensive guides. The app will have a section for travellers to share their routes, advice and top tips for each trip. Secondly, the creators recognise that it can be difficult to find people to travel with. Whilst going it alone may seem appealing for some, it can be a daunting thought; however, they may not always want to go to the same places, or go at all – which can mean people don’t always get to travel when they have the chance. The app will intelligently match travellers looking for a trip partner, and operate as an instant messaging system to get to know each other and discuss plans.
The business is currently crowdfunding for investment on Seedrs, looking for a £70,000 investment in return for 12% equity. The campaign has only been running a few days and has already raised £20,000 of the target.
The creators, Paolo Dotta, Luca Comunian and Gabriele Pigoli, have done extensive market research on their idea. They see their target market smartphone users between 20 and 34 years old, unmarried and with an average salary of £20,000 plus. They estimate that around 200 million people worldwide represent this total market; meaning there’s plenty of potential users out there.
Furthermore, the company point to the fact that roaming charges will be abolished in all 28 countries of the EU by December 2015, making it even easier for Peopletrip users to stay connected and interact during their journeys.
They have a complete marketing strategy to put the money raised through crowdfunding to best use, combining PR activities, flyers in main square, clubs and universities in London and Milan with paid social media marketing campaigns, including Facebook, Twitter, Instagram. A further incentive for investors is that the ap is eligible for SEIS tax relief, providing individuals with 50% of their investment back in income tax relief.
For further information on investing in Peopletrip, visit their campaign page on Seedrs.
Miranda Wadham on 05/08/2015
LSE reports strong half-yearly profits
The London Stock Exchange (LON:LSE) reported a 21 percent jump in its first-half profit after tax.
The profits were driven by robust growth in its global indexes business, FTSE-Russell, who own Borsa Italiana, MillenniumIT, Russell Investments and the London Stock Exchange. FTSE-Russell rose 2.9 percent this morning to become one of the biggest gainers in the FTSE 100.
The exchange group said it would pay an interim dividend of 10.8 pence, up from 9.7 pence last year.
The London Stock Exchange is currently trading up 2.17 percent this morning at 2634 pence per share.
Commodities show signs of stabilising, outlook remains weak
Commodity prices stabilised on Tuesday after a key index fell to its lowest closing level since 2003, with oil moving back above $50 a barrel.
Brent LCOc1 added 1.2 percent to $50.12 a barrel. U.S. crude CLc1 gained 1.6 percent to $45.89 a barrel.
“A retest of Brent crude’s 2015 low around $45 per barrel looks inevitable given current ample market supply and intensifying bearish market sentiment toward prices,” BMI Research said in a note.
Copper edged up 0.3 per cent on Tuesday after hitting a six-year low of $5,163 a tonne on Monday, and gold traded up 0.6 per cent at $1,091 a troy ounce on Tuesday, slightly above a five and a half year low of $1,077 hit two weeks ago.
Oil has been affected by oversupply, and is trading in a bear market both in London and New York. The outlook remains lacklustre, with volatile markets in China, the world’s second largest economy, and hints of an upcoming rate hike badly affecting commodity prices over recent weeks.
George Osborne has lost the tax payer £103 million, in one day
Shares in RBS are trading at 347p.
George Osborne has lost the tax payer £103 million in one day by selling RBS at 330p to institutional investors.
Institutions bit the UKFI’s hand off in the accelerated book build that raised £2.02 billion by selling a near 5% stake at 330p.
The issue was 2.4 times oversubscribed as fund managers scrambled to secure RBS shares at the lowest point of the year.
Those institutions are now up 5% on their investment, meaning the tax payer has lost an incredible £103 million in a single day.
When the RBS stake was sold, close to a £1 billion loss was crystallised.
Under the guise of a financial expert as the Chancellor of the Exchequer, George Osborne is now up there with high profile traders such as Nick Leeson and UBS Kweku Adoboli who lost sums around £1 billion. The latter two received prison sentences.
George Osborne appears to have made the classic retail investor gaffe and recklessly sold in a panic to smarter institutions as the price tumbles.
This isn’t all, he has done something that most professionals would applaud, he’s picked the lowest price of the year.
Unfortunately he and the tax payer are on the wrong side of it.
Societe Generale in 25% profit jump
Societe Generale is up 8 percent after beating analysts expectations to report a second-quarter net income of €1.35bn and revenue of €6.87bn.
Its global markets and investor solutions business was boosted by a 61 percent jump in equity trading revenue to €799 million. Financing and advisory income revenue increased 25 percent to €685 million in the quarter.
The bank said it planned to save another €850m in costs by 2017 on top of its annual target this year of €900m, and put the profit back into its capital base so that it is better protected against future losses.
Chief Executive Frederic Oudea said in a statement:
“In the coming months, the group will continue to develop in its strategic areas, capitalizing on the rebound in the European economy, and adapt to the technological and regulatory changes through the rollout of its digital strategy and the continuation of its operating efficiency efforts.”
Societe Generale are currently trading up 8.3% at 48.35 pence per share.
Standard Chartered halve dividend after profit drop
Standard Chartered (LON:STAN) reported its first half results this morning, announcing an overall fall in pre-tax profits and a decision to halve its dividend.
Cheif Executive Bill Winters, who joined the financial services company in February, said:
“Today’s results show the group has some very real challenges, but they are fixable and it is important to remember that there is a strong business at the heart of the group. The newly announced management team, together with all of our staff, are determined to get the group back on track.”
“If we decide we need capital for the long term benefit of the Group, If we decide we need capital for the long-term benefit of the Group, we will raise capital,” he continued.
Winters said that the company would raise capital externally if necessary as he outlined plans to boost shareholder returns and rebuild capital after continuous drop in profits. Overall pre-tax profits were down $3.2 billion on a year ago.
On Wednesday the the company appointed Mark Smith, from rival HSBC, as its new chief risk officer. Mr. Smith will join the Bank in January 2016.
Standard Chartered is currently trading up 1.08% at 962.90 pence per share.
Five simple tips for a successful crowdfunding campaign
Whilst creating a crowdfunding campaign may not seem like rocket science, if it’s not successful your company could miss out on thousands of pounds worth of investment. When it comes to your business, it’s probably not worth taking the risk – read over our five simple tips to make sure you get the most out of your crowdfunding round.
Social Media
Frankly, this one shouldn’t need to be said – a start-up company without a solid social media presence is a no-go right from the off. Social media is a free platform to sell your company, advertise your brand, reach out to potential customers and attract new business – it’s essential. When investors see your crowdfunding page on a platform, offer easy links to your Twitter, Facebook and LinkedIn so they can get a sense of what you’re about. Let your company’s personality shine through on each site, and update it reguarly to show that you’re staying on top of it. Use it to engage with people and create a brand presence. Through social media, its easy to reach out to smaller online websites and magazines that cover crowdfunding and business news – it could be that they need your story as much as you need the publicity. Trend hashtags, engage on Facebook, set up online Q&As and webcasts to get people involved.
Shoreditch Grind have successfully raised 159% of their target. Their tweets are displayed below:
[twitter-timeline id=628562291378753536 username=Shoreditchgrind]
A good video
Most crowdfunding sites offer the chance to put a video on your page – this can be a great advantage, so use it. Clearly, when raising money over the internet you can’t demonstrate your business or product to each investor individually; the next best way to persuade people of the value of your company is through a persuasive marketing video, effectively demonstrating exactly what it is you do. It is the chance to create an engaging visual definition of your company and get potential investors involved. Whether your video is emotional, comical or clear and factual, a video is an indispensable way to demonstrate what it is that your company does. And even better – there’s no need to invest in a professional to do it for you; there are plenty of video editing sites and apps available for free that, with a bit of creativity, will do the job just as well.
Restaurant chain Filmore & Union have just finished a crowdfunding campaign on Crowdcube and managed to raise 86% more than their funding target. Here is their promotional video:
[youtube http://www.youtube.com/watch?v=kklk1Ax7OdQ?feature=player_embedded&w=640&h=360]
Communication
Whether it’s good news or bad, it is essential to make sure your backers and potential backers are kept in the loop. Post regular updates on your crowdfunding page, and make sure you keep the process going after the campaign has ended – people want to know where their hard earned cash is going. Interact through thank-you emails and social media, ask questions and increase engagement through two-way dialogue.
Introduce the team
Make sure there are clear profiles of your key team members on your fundraising page. People love to put a face to the name, and it creates a personal point of contact so that investors can go direct to members to find out more. It’s all about making your company accessible and engaging – nothing works better in business than cultivating strong personal relationships.
Personality
Last – but definitely not least – give your page some personality. Tell potential investors the story behind your company, build an image of how you started and show them where you want to go. Dry facts and figures may be necessary, but without a hook to pull someone in it’s unlikely that potential investors will even get round to reading them. Have a sense of humour, captivate their interest and engage your investors and make sure you illustrate your company in a way that means they just can’t resist investing.
UK house prices rise, according to Nationwide
UK house prices have risen 3.5% over the last year, taking the cost of the average home to a record high of £195,621.
Official figures released by Nationwide this morning show that prices have risen 0.4% this month, but the annual pace of growth is down on last year.
Nationwide’s chief economist Robert Gardner said: “The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term.”
Mr Gardner said that there are signs that the housing market may be “stabilising close to the pace of earnings growth” which has been constant at around 4% a year.
This month’s price index by Nationwide takes into account the effect of stamp duty reforms brought in meaning £275million less tax being paid by home buyers than under the previous system.
Mr Garder estimated that “around 85 per cent of transactions in London, the South West and South East have benefited from the changes, compared with around 55 per cent in the North, Yorkshire and Humberside, and the North West of England.”
BMW express concern over Chinese market
BMW (ETR:BMW) have become the latest carmaker to admit volatile markets in China may affect business, as its sales fall in the country for the first time in a decade.
The world’s biggest luxury carmaker warned this morning that its outlook could be at risk if the situation in China worsens. The company joins Volkswagen, who have just lowered their sales forecast in China, and Audi, who have both expressed concern over weak demand in the region.
“If conditions on the Chinese market become more challenging, we cannot rule out a possible effect on the BMW Group’s outlook,” the Munich-based carmaker said in its quarterly report.
The company reported a 3 percent fall in second-quarter operating profit this morning, and shares in BMW dropped 2 percent in early trading becoming the second-biggest decliners on Germany’s DAX index.
“The scale of the increase during the forecast period is likely to be held down by fierce competition on automobile markets, rising personnel costs, continued high levels of upfront expenditure to safeguard business viability going forward and upcoming challenges relating to the normalisation of the Chinese market,” BMW said.