A recurring theme of our coverage of the alternative-finance sector is commentary on what's happening on the equity side of the crowdfunding fence.
As providers of debt funding for more mature small and medium-sized businesses (average age of our borrowers, 12 years-plus), we see equity crowdfunders as cousins, not competitors. Equity raises tend to come from young companies whose management is prepared to give a way a stake in the company in exchange for working capital.
The performance of the equity sector is no leading indicator for how peer-to-peer (P2P) business lending will perform, but a cousin is a cousin. So we keep a watchful eye on what's happening over there.
Contemporary media coverage has focused on the consequences of the Brexit decision – and the uncertainties as to how (if it all) it will ever be implemented. And it's very much a split decision so far.
The Financial Times offers a somewhat gloomy prognosis: "The number of investments offered online fell 17 per cent in the first half of 2016, compared with levels seen in the last half of 2015, according to research company Beauhurst.
"The fall follows 10 consecutive half years of growth in terms of the number of deals offered to investors.
"In value terms, Beauhurst found that crowdfunding platforms raised £87.4m in the first half of 2016, a drop of just over 4 per cent from the £91.3m raised in the previous six months. "However, these numbers also include institutional investments in deals offered on crowdfunding sites.
Beauhurst's head of research Pedro Madeira said the slowdown in crowdfunding was 'particularly noteworthy'.
"'Equity crowdfunding relies mostly on armchair investors, who will presumably be quicker to retrench their investment activity when they're fearful, and are therefore good real time gauges of investment sentiment,' he said."
Luke Peake, the 28 year-old founder of Uberated, a retail intelligence aggregator, takes a more positive outlook, however. He argues in This Is Money that quality backing and mentoring from seasoned investors is key to raising equity in today's environment, pointing to his own platform's recent raise as evidence for this: "Important and influential angels, who want to support key innovation in their industry or sector, are still out there and willing to back proven young businesses and entrepreneurs.
"Recent funding for the invoice platform Market Invoice and the success of Crowdcube's own post-Brexit fund raising campaign has shown that the appetite for the right investments - with solid traction and a clear growth strategy - is still holding up.
"The recent rise in the stock market is also a positive indicator.
"A rise in asset prices may assuage some of the nerves of high net worth backers, many of whom have direct City connections or investments.
"And one of the causes of the market rise, the relative attraction of shares versus property, could suggest that investors will be on the hunt for other areas of capital growth.
"The right start-ups combined with still generous tax breaks could be enough to convert some would-be angels.
"Of course even with my rose-tinted spectacles on I can see that the reality is, for the time being at least, that angels are much choosier than they have been in the past.
"Start-up CEOs have to adjust to this paradigm shift.
"There has been a tendency among many start-ups to splash the cash to make a quick impression, knowing more money was on tap.
"Now the well could be a whole lot drier. The real skill will be to make enough waves with customers with the money you have got and to get to cashflow breakeven as soon as possible."
Loans & Risk
We have new offerings in the pipeline. Our loans are only offered if our borrowers can clearly demonstrate affordability for the amount requested. Moreover, Money&Co. takes a charge over the assets of the company, which is exercisable if a borrower defaults. The relevant assets could then be sold and used to reimburse lenders. See our recent article on Money&Co.'s conservative attitude to vetting deals.
A simple explanation of borrowing and lending can be found here, on our Knowledge Hub