News Briefing - Crowdfunding, SME And Alternative Finance

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1. UK – Equity

 

Crowdund insider reports Beauhurst research that shows a fall in the growth of equity crowdfunding in the UK.

 

“A report released this week indicates a decline in both the number of deals and the total amount deals for the UK early stage equity market. Beauhurst has published their annual recap of total investment for 2018. The Deal quantifies the UK entrepreneurial ecosystem stating that “2018 was a strong year but not strong enough,” following a blowout year in 2017.

Granted, 2018 registers about the same number of deals as 2016 and 2015 and significantly more in money invested, but the authors wonder aloud if Brexit fears are throttling investment. The news is not really that bad and the authors admit that 2018 could be nothing more than a correction from “dizzying heights.”

So how does 2018 compare versus 2017?

  • In 2018 there were 1572 deals versus 1744 deals in 2017
  • A total of £7 billion was invested last year while in 2017 £8.6 billion was invested
  • The average investment dropped by 15%  to £5.4 million
  • Deal size remained high and only 50% of seed stage funding was under £500,000
  • Seed and Venture rounds increased slightly, while Growth dipped and “Established” tanked
  • Fintech remains the strongest sector of equity investment with a record number of deals
  • Fintech investment in 2018 stood at £1.2732 billion versus £1.2885 billion in 2017 – a slight decline
  • Female-founded firms and the number of deals was flat at 16% and £570 million funded
  • Female-founded businesses secured 13% of VC deals in 2018, women did better with crowdfunding garnering 20%”
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2. US - SMEs

Built In Chicago offers its pick of the city’s 50 best start-ups.

“Every year, Chicago further strengthens its position as a tech hub, backed by $1.4 billion in funding raised in 2018 and home to young companies like Tempus, FourKites and project44 that have become instant industry powerhouses.

And with new companies with great ideas and vast potential popping up all the time, the city’s tech scene shows no sign of slowing down.

To show you just how strong our local tech scene is, we’ve hand-picked 50 Chicago-area startups — all founded within the last five years — that are on track to have a big 2019. Some are big, some are small; but in any case, don’t be surprised when you see their names in the headlines soon.”

3. International – FinTech

 

WhosWhoLegal runs a feature that claims FinTech is transforming Brazilian financial services.

 

“According to CB Insights, Brazil is Latin America’s leading tech hub. It accounts for most of the US$1 billion in venture capital invested in the region last year, and registered over 450 technology-oriented start-ups in 2018. Since 2014, there has been a sharp growth in new projects favouring business models built on technology, striving for sectors typically overlooked by larger players.

A Brazilian unicorn, Nubank, was recently valued at US$4 billion through its Series-E US$180 million investment from the Chinese giant Tencent. Another native start-up, 99, was acquired in January 2018 by Didi Chuxing, after a multimillion-dollar investment by SoftBank.

In 2017, approximately US$31 billion was invested in fintechs globally, an increasing share of which has been channelled to Brazilian fintechs. E-payments, cryptocurrencies, investment crowdfunding, blockchain, open banking and other globally trending innovations are now the talk of the town and familiar to local regulators. Culturally this can be explained by the fact that Brazilians are particularly eager to use technology, especially when it opens the door to financial services that were not previously accessible to them.” 

 

 

4. International – AltFi

 

The entertainingly named industry news organ, Brews News, runs a feature containing a claim that UK equity crowdfunding is less trustworthy than its Australian equivalent.

“Australian equity crowdfunding platform Birchal has responded to criticisms of the investment vehicle raised in the UK, saying they did not apply to the Australian market.

The UK’s Financial Conduct Authority warned last week that equity crowdfunding is a high-risk investment and has the “potential for capital losses”.

“It is very likely that you will lose all your money,” the Authority said.

Birchal’s Matt Vitale told Brews News that the UK and Australian crowd-sourced funding regimes are considerably different.”

Note to our readers: The statement by the FCA is accurate, but was made in April 2016, not last week. Another Crowd suggests you only putmoney into an investment if you understand the risks, are comfortable taking them, and know how to spread risks across a diversified portfolio.
      

5. International – P2P

 

Crowdfundinsider runs a feature on a Finnish P2P platform.

 

“Finland based peer to peer lender Fellow Finance announced on Tuesday its platform hit a record-breaking milestone by facilitating €18.5 million of loans in January 2019. The online lender reported that the total number of investors also grew to 11,205.

As previously reported, Fellow Finance was founded in 2014 and its main business activity is crowdfunding and peer-to-peer lending services. The company states that by volume it is the leading loan-based crowdfunding and peer-to-peer lending service in the Nordics.”