UK Altfi Sector A Major Beneficiary Of Northzone Move
Rumours of the death of the alternative finance industry are exaggerated. Altfi reports strongly contra-indicative news, at least:
In its largest fundraise ever, venture capital firm Northzone has raised a massive €1bn.
The firm now plans to use its tenth round of funds to invest in global consumer and enterprise companies across both the US and Europe.
Northzone will continue to focus on companies with “strong propositions”, it said, and leaders that have the “vision and conviction” to succeed on a global stage.
In line with the company’s long-term investment philosophy, it will focus on opportunities across all funding stages, from seed through to IPO.
“The tech, the talent and the growth trajectories are an order of magnitude greater than a decade ago,” Northzone partner Jessica Schultz said.
“Raising €1bn recognises the enormous ambition of European founders and the capital they need to create world-beating businesses.”
The European VC has an impressive portfolio with a number of fintechs, including Zopa, Klarna, Wagestream, Yonder and TrueLayer, and is looking to back the best tech companies of the next decade.
With an equal gender split in its investment team, Northzone emphasises the need to build diverse teams, both internally and in its portfolio companies.
Since launching its $500m Fund IX in 2019, the company has expanded its offer to founders, with new hires across sustainability, marketing, talent and business development.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
That figure is the result of over £24 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
- Money&Co. has been lending for over 7 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.
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