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News Briefing - Crowdfunding, SME And Alternative Finance

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The essentials are here and will be regularly updated. If you want to be well-informed about the investment crowdfunding scene, and you're short of time, this is the place to visit.

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1.UK – P2P

P2P Finance News recycles EasyMoney research that points out the poor returns available on CSH ISAS.

 

“UK SAVERS are losing more than £1bn in income from their bank accounts each year, according to research from EasyMoney, part of Sir Stelios-Haji-Ioannou’s easy family of brands.

The recently-launched peer-to-peer lender said on Saturday that this represents a 16 per cent annual loss in income – caused by a combination of poor interest rates and rising inflation.

By comparison, the platform is offering annual returns of 7.28 per cent via its ‘balanced’ Innovative Finance ISA.

“Savers are increasingly fed up with seeing their money just sitting doing nothing in bank accounts,” said Andrew de Candole, chief executive of EasyMoney.

“It’s easy to see why: these figures show that savings accounts’ and cash ISAs’ performance has been getting worse. With inflation eating away at values, the reality is there’s very little incentive to save through these traditional routes.”

The bank account figures were gathered between 2014/15 and 2015/16 and found that the total amount of interest received from UK bank accounts fell from £6.8bn to £5.7bn during this period. However, de Candole warned that the loss of income could be even higher in real terms, once the latest inflation figures are taken into consideration. At the end of the 2015/15 financial year, inflation was -0.1 per cent, but it hit three per cent in January 2018. This could translate to an even greater loss of income for savers using low-interest bank accounts.”

 

2. UK – FinTech

 

 

Business Weekly reports a new AI-powered fund:

“Steered from Martlesham in Suffolk, the initiative is spearheaded by Britbots and Sapphire Capital Partners, a specialist manager of tax-efficient funds. Their partnership is already helping robotics and AI entrepreneurs accelerate commercialisation of their ventures.

Britbots says the second British Robotics Seed Fund has attracted a lot of investor interest and has been well subscribed. The fund will be used to take stakes in more high-potential robotics and AI-related ventures.

The new fund will predominantly focus on SEIS-qualifying investment opportunities to deliver the most significant tax benefits to investors. There will still be scope for the fund to make a number of investments under the EIS scheme when there are scale-up opportunities for existing portfolio companies. 

In a climate where returns on listed investments are constrained, exploiting the rapid global adoption of robotics and AI systems whilst also benefiting from attractive tax reliefs under SEIS/EIS makes for an exciting high-growth investment strategy, as part of a broader portfolio.”


3. UK – FinTech

David Stevenson looks at cryptocurrencies in the Financial Times:

“Sometimes it is better to be late to the party than not arrive at all. This sums up my feelings on cryptocurrencies, a new and once rapidly expanding part of the universe of alternative finance. A few months ago I decided to punt (note my choice of words) a few hundred pounds on a digital currency called Ethereum via a listed tracker product. This decision was nothing short of disastrous, as the price of said tracker promptly plummeted faster than the proverbial lead balloon. Last time I looked, it was still heading south, weighed down by a barrage of bad publicity as regulators took action against cryptocurrencies all over the globe and internet platforms such as Google and Facebook announced they would ban adverts promoting cryptocurrencies. Truth be told, it is easy to pick emmenthal-sized holes in the current craze for all things bitcoin and blockchain. You could seize on these digital currencies as being customer unfriendly: in 2016 only five of the leading 500 US retailers took bitcoin, a number that has since fallen to three. Another factoid: it costs 2 cents on average to handle a cash transaction but $2.80 for bitcoin. Each transaction takes 10 minutes to verify while credit card platforms can handle 65,000 transactions a second.”

 

4. UK – SMEs

 

David Prosser reports in Forbes:

 

“Britain’s technology startup sector is booming. While there are some signs that the British drive to greater entrepreneurialism is slowing – Companies House says there were fewer new businesses launched last year than in 2016 – new research suggests more new technology firms than ever before are now plying their trade.

The number of new technology companies launched in the UK last year rose by almost 60 per cent according to analysis conducted by the accounting and audit firm RSM.

Its study of Companies House data suggests a total of 10,016 software development and programming businesses were incorporated in the UK for the first time during 2017; that represents a 59 per cent increase on the 6,300 companies set up in 2016.

Moreover, while London continues to dominate the tech sector, playing host to more than 40 per cent of the startup in the industry last year, it is far from the only area of the UK in which entrepreneurs have been active. RSM said the Companies House data revealed growth in technology company incorporations in every region in the UK last year.

In London, new technology company incorporations reached 4,238 last year, a jump of 76 per cent. The broader South-East region saw 1,296 startup , a 40 per cent rise on 2016, while the North West was the UK’s third busiest region for technology business launches, with 707 new firms incorporating, 29 per cent up on the previous year.”

 

5. UK  SMEs/FinTech

 

IT Portal reports an initiative by Worldpay.

 

“In an effort to help over 30,000 small businesses in the UK access alternative financing, Worldpay has announced that it will extend its Business Finance scheme that allows business owners to access a 'cash advanced' based on their future credit and debit card sales. 

The news comes after a survey of 1,000 small business owners in the UK, commissioned by the company and carried out by YouGov, revealed that one in three small business owners have reported diifficulties in securing loans from banks.

In 2015, the Worldplay scheme was launched in partnership with Liberis and to date it has granted over £50m to UK businesses.  Small businesses can receive funding in as little as 72 hours. 

The company's research also highlighted the fact that businesses under five years old are just as likely to choose alternative finance methods as they are to turn to a bank to secure capital.”

 

6. US – P2P

 

Pensco, an alternative asset custodian for self-directed IRA investors, announced on Monday it has launched Custodian Connect, an API-driven capability that seamlessly connects investment platforms to Pensco enabling uninterrupted opening and funding of an IRA from within the platform.

According to Pensco, Custodian Connect enables a fully integrated end-to-end paperless process, eliminating duplication of data entry, and is the first of its kind to also provide digital consent and Automated Customer Account Transfer Service (ACATS) to expedite funding transfers.


Regards,