We're Talking About A Crowdfunding, P2P Revolution


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Did you catch Money&Co. CEO Nicola Horlick's crowdfunding rallying cry for the coming financial revolution in her latest Huffington Post blog? It's attracted wide attention online, but in case you missed it we reproduce selected highights below.

"Crowdfunding is not a new concept. Stock markets are in effect a form of crowdfunding with individuals or institutions having fractional ownership of companies. Property funds are also a form of crowdfunding - investors put their money into the fund and the fund then buys a large office block or a shopping centre. Electronic platforms have now made it possible for 'the crowd' to fund individual projects like the making of a short film (Kickstarter), provide equity finance to start-up businesses (Crowdcube and Seedrs) or lend money to companies (Money&Co. and Funding Circle). Or you can lend money to individuals (Zopa).

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"With each of these models, the crowd gets different returns. With rewards-based crowdfunding (Kickstarter), they might get to go to a screening of the film that they have financed, but they have no financial interest in the project. With equity crowdfunding, they own part of the business. In the UK, investors may get attractive tax incentives if the company has Seed Enterprise Investment Scheme ("SEIS") approval or Enterprise Investment Scheme ("EIS") approval. With debt crowdfunding, if money is lent to individuals (Zopa) or companies (Money&Co. and Funding Circle), then the crowd gets a rate of interest on its money (8.9 per cent gross currently on the Money&Co. site across all the loans made so far)....

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"Equity crowdfunding gets a huge amount of press, but it is dwarfed by debt crowdfunding. At the end of last year, NESTA and the University of Cambridge produced a report, which estimated that £84m of equity finance was provided to UK SMEs by crowdfunding sites in 2014 and that nearly £749m of debt finance was provided.

"This reflects the lower risk nature of lending to SMEs as opposed to providing equity finance for early stage companies. It also reflects the interest that is developing in this area from debt funds and institutions. This is good news for UK SMEs, who continue to find it hard to borrow from banks. This is because the banks are forced to provide a 100 per cent capital weighting for an unsecured loan to an SME, which makes it uneconomic for them to lend. They also shy away from transaction-based lending for management buyouts and acquisitions.

"I have no doubt that crowdfunding is here to stay and I strongly believe that debt will be the biggest sector with lending to companies outstripping lending to individuals by a big margin over the coming years.

"Money&Co. is the most exciting business I have ever been involved with. It is a much overused phrase, but I believe that debt crowdfunding truly constitutes a financial revolution."

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*** Are you registered with Money&Co.?

Our registered users had the opportunity to claim a ticket at the recent Discovering The Power Of The Crowd conference at a discount of £40 to the full £190 price, which included a star-studded line-up of speakers, lunch and networking drinks. We are planning another conference in Exeter on 17th September, and another in London in October, with full detail to be released soon.Register to make loans and to benefit from future conference discounts by signing up here. It takes just a few minutes.

Yield & Risk

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The average gross yield achieved by Money&Co. lenders is over 8.8 per cent. Selwyn Building Services, the latest loan offering on site, is seeking a three-year loan to accelerate its business development. The company has been through our rigorous credit-analysis process and been awarded a 'B' rating, with a guideline indicative gross yield of 9 per cent.

NB Lending carries risk. Read warnings on Home, Lend and FAQ pages.



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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.