News Briefing - Crowdfunding, SME And Alternative Finance

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Herewith today's crowdfunding, SME and alternative finance news round-up.

1.UK – FinTech


FinExtra reports on the latest incursion by the sector into mainstream banking.

“Having just raised $20 million in a sold-out token sale, British blockchain-based banking platform Babb has set its sights on opening its first bank accounts before the end of the year.

FCA-authorised payment institution Babb (Bank Account Based Blockchain) is building a decentralised banking platform to provide anyone in the world with a bank account, payment card, and access to its global peer-to-peer network.

The new cash influx will be used to jumpstart development of the platform and a mobile banking app and decentralised payment card, the Black Card. 

The app, set for launch by the fourth quarter, will initially offer the ability to open a bank account using face and voice recognition and make domestic and international transactions, with more advanced functionality to follow in 2019. 

The firm is also hoping to have a full UK banking licence by the end of the year, making it the first regulated blockchain bank in the world.”


2. UK – SMEs/FinTech


Joel Perlman, co-founder of OakNorth (the bank of which Adair Turner is a director) asks in Specialist Banking whether SMEs favour equity over debt.


“At the beginning of 2017, SMEs in the UK accounted for 99.3% of all private sector businesses and 60% of all private sector employment in the UK.

Last year saw a substantial increase in the value and number of SME equity deals (up 79% and 12% respectively) in the UK, as well as continued growth in the value of SME asset finance deals (up 12%) and P2P lending (up 51%).

This was at the same time that traditional bank net lending declined to £700m – down from £3bn the year before.

Why do equity and alternative finance options continue to grow in popularity while traditional bank loans decline?

It generally comes down to time – business owners have very little of it and often don’t start looking for growth capital until a few weeks before they need it.

Securing equity or undergoing a crowdfunding campaign can take just a few weeks, while P2P lending platforms can grant loans of several hundred thousand pounds in a matter of hours. This compares to traditional bank loans which typically take several months to complete.”


3. UK – Equity


The Irish Times on attampts to boost equity raises in Ireland:


“Crowdfunding platforms have established themselves as a viable alternative to traditional equity funding sources for start-ups locally, according to cross-Border enterprise promotion body InterTradeIreland.

The organisation, which has this week issued a new guide for companies considering going down the crowdfunding route, said it is becoming an increasingly popular option for firms looking to scale.

Its report shows £206 million (€230.6 million) was raised by start-ups across the four leading equity crowdfunding companies in the United Kingdom last year. Overall, there were 352 deals completed with the average per deal working out at £584,000 (€652,000).

Among the Irish start-ups to avail of crowdfunding campaigns last year were HouseMyDog, Flender, See.Sense and Re-Vana Therapeutics, whose stories all feature in the new guide.”


4. US – FinTech


A sign of the times. Crowdfundinsider carries a self-help guide for ICO issuers who find themselves on the wrong end of a subpoena from the SEC, including helpful tips such as “do not ignore the subpoena”.


“For initial coin offering (ICOs or token offerings, SAFT, etc.) issuers, investors, token holders, and anyone else operating in the cryptocurrency market, the message of recent days is clear: the U.S. Securities and Exchange Commission has shifted into high gear. News reports indicate that the enforcers at the agency have issued subpoenas to numerous ICO issuers, funds and other companies. The risks and potential consequences are significant and real, requiring immediate and thoughtful action.

Receiving a government subpoena can be jarring. However, following a few simple but important steps can help you handle the SEC’s requests responsibly and minimize fallout. To help navigate these challenging waters, consider this list of top ten tips if you receive, or think you could soon receive, a subpoena or other request for information from the SEC.”


5. US – Equity


An equity platform raises working capital for itself.


“Vancouver-based FrontFundr is the leading equity crowdfunding platform in Canada, having raised a combined total of over $8 million for Canadian businesses since launching in 2015. Wanting to grow their capacity to support even more raises, FrontFundr's management team launched the company's second equity crowdfunding campaign using their own platform on February 27. Just three days after launching, the campaign exceeded its initial target of $500,000.

"By raising capital for FrontFundr on FrontFundr, we are showing our complete commitment to our platform and process, and bringing in new investors who may consider backing other projects we have listed," said Peter-Paul van Hoeken, while speaking at the National Crowdfunding and Fintech Association of Canada (NCFA Canada) conference in Toronto on Monday. "Achieving the goal so rapidly is an endorsement of the service we offer, and the desire for our backers to help us grow and support even more Canadian companies."

FrontFundr is now continuing their campaign to achieve their maximum target of $1.5 million.”