Another Crowd is openly positive about crowdfunding, but our convictions are based on evidence. Our editorial policy is to introduce our readers to facts and ideas that will help them to think for themselves and make better investment decisions.
We appreciate well-informed scepticism, but we've seen rather too many articles we could summarise as "New Things Are Dangerous: Be Afraid of Them."
Balanced? Or taking aim at crowdfunding?
This week, we were happy to see an article in This Is Money that we hope signals a change of heart in that journal's reporting of crowd investment.
We've decided to share Holly Black's original piece and a thoughtful response from our conference co-sponsors, Money&Co, which we would describe as the peer-to-peer lender's attempt to focus investors' minds on facts that are relevant to making prudent investment decisions.
"[The recent Mail article by Holly Black] is a balanced piece on equity crowdfunding and bonds issued by companies looking for growth," opines Money&Co. "It doesn't address peer-to-peer (P2P) business lending – our sub-sector of the market - which is already the biggest and fastest-growing part of the crowdfunding universe. But that gives plenty of scope to tell the bigger story at a later stage.
"Crowdfunding is generally for start-ups and businesses hoping to grow. Essentially, you're part of a crowd of people funding the business through smallish sums," writes Ms Black.
"Retail bonds are usually for better-known companies looking to expand and pay down debt.
"The bonds they issue promise to pay a set rate of interest for an agreed number of years - and you should get your capital back at the end, too.
"The attraction is that both offer returns that should be higher than you'll find anywhere else on the High Street.
"But these investments aren't like standard savings deals from banks - even if they do tend to look like them.
"Your money is at risk. So, savers need to consider whether the projects they are backing are really investment-worthy."
*** P2P – Is it safe? ~Below we refer to the Yorkshire Building Society's "guide" to P2P, as published in yesterday's News story... An earlier survey (this one is essentially a re-hashed version of an earlier piece of research in the Spring) is analysed here, on the Another Crowd crowdfunding intelligence platform – which goes on to look at relative degrees of risk: "There is some feeling in the crowdfunding industry that the survey is a piece of scaremongering. After all, banks and building societies currently offer savings products with yields at or close to historic lows. The survey focuses on awareness of security - an area where deposit-type savings accounts benefit from theFinancial Services Compensation Scheme."