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News Briefing - Crowdfunding, SME And Alternative Finance

crowd children

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 reports:

“FINANCIAL advisers are avoiding giving advice on peer-to-peer lending because they are worried it will not be covered by their professional indemnity insurance (PII).

Max Lehrain, chief operating officer at P2P property lender Relendex, said P2P investing is a “grey area” when it comes to PII.

Some independent financial advisers (IFAs) assume it is covered under the general advice section of their policy, whereas others do not think it is covered at all.”

 

2. UK – P2P

 

FinExtra reports:

“Lendy – The Property Platform, one of Europe’s largest peer-to-peer platforms, has received full authorisation from the UK regulator, the Financial Conduct Authority (FCA).

Lendy’s secured lending model was authorised by the FCA following a detailed end to end assessment of its business and operating model.

Lendy, which launched in 2012 and has to date facilitated over £400m in lending, has 21,500 registered investors and will continue with its existing investments, but through the new mandate will look to innovate new products and services in line with its full FCA permissions.” 


 

3. UK – AltFi

 

Asset-rich over 65s with significant spending power are spending more time on line, becoming increasingly tech-savvy and have the time to research and invest online rather than give their cash to a wealth manager to throw into a fund, according to London Loves Business.

“Today, 80 per cent of 65-74 year-olds are now online regularly – up from 52 per cent in 2011, while the percentage of 75 year olds who regularly use the internet has more than doubled to 44 per cent during the period, according to recently released Office of National statistics.

As such, companies focusing on shopping, socialising and investing are potentially ignoring huge markets if they don’t take the needs of seniors into account, according to Parul Scampion, co-founder of new online investment platform, propio.com.”


 

4. UK – AltFi

 

Specialist lending markets experienced strong growth in May, helped by low interest rates and a strong labour market, according to figures quoted by P2P Finance News.

“Three of the four specialist lending markets covered by the Finance & Leasing Association (FLA) saw double-digit growth, including consumer finance new business, which rose 11 per cent year-on-year to £9.1bn.

Credit card and personal loan new business together grew by 11 per cent, while retail store and online credit new business increased by eight per cent.”


5. UK – FinTech

 

Coin Desk on an LSEG move to embrace blockchain raises:

“Blockchain crowdfunding ideas may be ten-a-penny these days, but seeing the concept tested out by a financial regulator and a major stock exchange is pretty unique.

Still, that's what's happening now in the U.K. where the London Stock Exchange Group (LSEG) and U.K. financial regulator, the Financial Conduct Authority (FCA), are working with distributed ledger technology startup Nivaura and 20|30, a UK company building a blockchain platform for corporate equity issuance.

One of the more exciting projects within the fourth cohort of the FCA's regulatory sandbox (some 40 percent of the cohort use distributed ledgers), the collaboration will target institutional as well as accredited investors using the LSEG's Turquoise, the hybrid exchange platform for European equities that allows trading both on and off traditional exchanges.

The aim is to demonstrate for the first time in a live deal that equity in a U.K. company can be tokenized and issued within a fully compliant custody, clearing and settlement system.

As such, the first company to test out a primary issuance of tokenized stock will be 20|30 itself in September of this year, a launch to be followed by a one year lock-in period according to Tomer Sofinzon, co-founder of 20|30.

20|30 says that as soon as the first testing phase is complete, there exists a pipeline of dozens of young companies looking to try the tokenizing process out. These include medical device makers, firms in the pharmaceutical space, agricultural companies, and software providers.

Since the equity tokens being issued will be built on ethereum, trading of these will presumably start to happen, at least on an over-the-counter (OTC) basis, once the lock-in period has passed.

"That's absolutely possible," said Sofinzon. "After the lock-in period, we can begin the next phase, to really test the tradeability."

The test follows a number of similar efforts to make more liquid markets for equity crowdfunding using blockchain tech, including the Korea Exchange which launched the Korea Startup Market for trading tokens OTC back in 2016.

The London Stock Exchange said in a statement to CoinDesk it is exploring blockchain as a way to help SMEs and to "innovate the issuance and tokenization of securities enabled for execution and settlement within the LSEG Conduct of Business framework."


6. US – Regulation

 

The US House of Representatives passed the “Main Street Growth Act” (H.R. 5877) recently, according to Crowdfundinsider. The bill was passed on a voice vote indicating solid bipartisan support.

“Sponsored by Representative Tom Emmer of Minnesota, the bill amends the Securities Exchange Act of 1934 to allow for the registration of venture exchanges with the Securities and Exchange Commission to provide a venue that is tailored to the needs of small and emerging growth companies and allows qualifying companies a venue in which their securities can trade.

Per the bill:

“A venture exchange ‘ may only constitute, maintain, or provide a market place or facilities for bringing together purchasers and sellers of venture securities”

The language of the bill also includes the possibility of a creation of an “Office of Venture Exchanges within the Commission’s Division of Trading and Markets.”


7. International – AltFi/SME

Crowdfundinsider reports:

“Iwoca, a European alternative small business lender, has reached profitability in the first half of 2018 amid a doubling of revenue over three successive years. Since launching in 2012, iwoca has reported lent £500M to 20,000 businesses. To meet soaring demand from its small and micro business customer base, iwoca lent a company-record £2.2 million to 137 businesses in a single day at the end of June 2018, funding small businesses with more than £1,500 per minute.”


8. International – FinTech

Deal Street Asia reports a Singapore raise:

“Singapore-based Insignia Ventures Partners, founded by ex-Sequoia Asia partner Yinglan Tan, has participated in the $9-million seed round of Aspire, a Southeast Asia-focused lending platform headquartered in the city-state. Other investors who joined the round include Mark 2 Capital and Hummingbird Ventures. Y Combinator, the Silicon Valley accelerator, is also among Aspire’s investors.”


9. International – FinTech

 

An official at the People’s Bank of China (PBC) tasked with regulating internet finance has reiterated the Chinese state’s determination to stop all ICO and crypto investing in the country, even solicitations to invest emanating from overseas, Coindesk reports.

“According to the the Chinese publication Yicai, Pan Gongsheng, Deputy Governor of the People’s Bank of China and Director of the State Administration of Foreign Exchange as well as head of “The Finance Rectification Working Group” told colleagues on Monday that the moment calls for decisive action and long term policy creation to restrict access to “digital asset” investing.

Pan referred broadly to many aspects of peer-to-peer online finance, but also narrowed his comments to discuss ICOs (initial coin offerings), ‘disguised’ ICOs and “crypto asset” trading, all of which are prohibited in China, and “represent illicit forms of fundraising and securities issuance,” according to Coindesk’s Wolfie Zhao.

Pan reportedly told working group members that, although domestic crypto trading platforms have all been shut down in China, offshore exchanges have been continuing to illegally service and solicit investments from Chinese nationals.

The comments surfaced just as the first meeting of the State Council’s Financial Stability Development Committee took place.

In a statement released by the PBC, Gongsheng said that preventing and resolving major risks is the first of the three major battles identified by the central government. And internet financial risk is an important aspect of financial risk. The coordinated effort by multiple government branches is tasked with establishing a regulatory system that adapts to the characteristics of Internet finance (aka Fintech).

According to Zhao, Gongsheng was unequivocal:

“Any new financial product or phenomenon that is not authorized under the existing legal framework, we will crush them as soon as they dare to surface.”

Although the Deputy Governor did not lay out details as to how the activity will be quelled, Coindesk reports that Chinese messaging app WeChat, for example, has been placing limits on the amount of fiat currency users’ can transfer on a single day, and may have been surveilling the app in an attempt to detect crypto trading.

A person familiar with crypto in China told me earlier this year that, despite the ban, Chinese investors are continuing to access ICO “pyramid schemes” by word-of-mouth.”