News Briefing - Crowdfunding, SME And Alternative Finance

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1.UK – FinTech

Digital bank Starling has lent out over £90m to SMEs in Bounce Back Loans (BBL), with a total of £120m committed, just a day and a half after opening the scheme, according to AltFi.

Anne Boden’s digital bank was among the first eight lenders approved to offer loans under the scheme just over a week ago.

The BBL Scheme, for which Starling’s applications opened on Monday morning, offers SMEs a 100 per cent government-backed guarantee for loans between £2,000 and £50,000.

As well as dishing out a £90m in loans, Starling revealed that it has attracted nearly 1,900 new business accounts, now including its newly launched sole trader accounts, on Monday alone.”

2. UK – FinTech

Inc42 looks at the possible role of VCs in the Covid crisis world of finance.

“In the fight for survival, startups started laying off employees in droves. And while survival is important, it’s also wise to consider the implications of such layoffs and what they mean for the people who have brought the startup to where it is. As POSist cofounder and CEO Ashish Tulsian said survival is key to providing employment, but not at the cost of empathy. “If your company will not survive, there is not going to be an employee anyway. Understand that it is happening with everyone, your employees will also understand some of them may not understand immediately, but they will,” he added.

So what can employers do to avoid such a situation where they have to choose between employee cost and survival? Many have suggested deferred payments and incentives such as ESOPs, but as venture capitalists zoom in on their portfolio, they would realise that many startups cannot retain talent with just these measures. Especially, if entrepreneurs themselves are taking pay cuts ranging from 30%-100%

But one interesting solution was floated by Orios Venture Partners’ Rehan Yar Khan. In a tweet, Khan said, “Should VCs be talking about salary cuts & exits in portfolio companies when drawing above sustenance salaries themselves?”

 

3. UK – FinTech

AltFi on recruitment moves in the sector:

Relendex, the peer-to-peer property lending platform, is gearing up to appoint a new CEO “within a few months” with its new chief investment officer lined up for the role.

Last week it was announced that Anthony Shayle had joined the business as CIO, coming from UBS in the Asset Management Division as head of real estate debt (EMEA).

At the time Relendex said: “It is anticipated that he will step up into the role of Chief Executive Officer within a few months.”

Yesterday the business also appointed Aaron de Silva as director of sales, previously head of business development at PLS Solicitors and in residential development at Knight Frank, reporting into Shayle in his new role.”

 

4. UK – AltFi

P2P Finance News runs a piece on alternative investment, based on numbers from a player in the alternative investment market.

“Investors cautious about the uncertain buy-to-let market could seek better returns in alternative investments such as Innovative Finance ISAs (IFISAs), jewellery, fine wine and classic cars, Sourced Capital has claimed.

The peer-to-peer property lending platform looked at the best alternative investments for those wary about entering into the buy-to-let market because of the Covid-19 pandemic leading to mortgage holidays and a government freeze on evictions.

At present, the average UK property provides a rental yield return of just five per cent, or 4.2 per cent when investing in bricks and mortar in the capital.

Meanwhile, Sourced Capital’s IFISA gives returns of up to 12 per cent.

Since 2005, investing in jewellery has proved a better option than buy-to-let, with an average annual return of 6.7 per cent and vintage watches have made returns of 8.4 per cent per annum.

Furthermore, fine wine has seen an average annual return of 13.2 per cent since 2005, while classic cars top the list with a return of 16.4 per cent.”

 

5. International – FinTech

BlockCrypto runs a comment piece on building a crypto portfolio.

“Crypto is an emerging asset class and whilst general investment principles are the same as in conventional markets, their application needs to be re-evaluated and sometimes adapted to cryptoassets’ singular features. The same holds true for how a fund of crypto venture funds is constructed. Whilst the principles and philosophy remain the same, we do not believe General Partners (GPs) should simply copy/paste established practices and guidelines or that Limited Partners (LPs) can demand that of them.

The standard VC portfolio model of “30 portfolio companies, with about half of the fund reserved for doubling down on portfolio companies that show the most promise early-on” has been adopted by most emerging managers. In our opinion, this cannot be simply adopted in crypto without further considerations.”