News Briefing - Crowdfunding, SME And Alternative Finance

A horse race as a metaphor for the stock market

1. UK – FinTech 

 

AltFi reports:

Funding Xchange, the alternative lender marketplace, has announced that it is among the fintechs which have submitted funding bids as part of the BCR’s £100m Pool E. 

The bid is a joint application along with business support network Enterprise Nation and the funds will be used to integrate Funding Xchange into a new Enterprise Nation Finance Portal. 

According to Emma Jones, founder and CEO of Enterprise Nation: “Adding the Enterprise Nation Funding Finance Portal to the overall Enterprise Nation platform would make a huge difference to many of the businesses that look to us for help and support.” 

Funding Xchange is already doing amazing things to plug the funding gap, and with the support of the RBS Remedies fund, we could do so much more to help businesses at this critical time.” 

Pool E is the long-awaited solution to the BCR’s dilemma of what to do with the £50m returned by both Nationwide and Metro Bank earlier this year after both admitting they would be unable to deliver on earlier commitments. 

The new Pool mirrors some of what the earlier Pools A-D were trying to achieve, although the sums of money are far smaller this time around and have been split across two rounds.”

 

2. UK – FinTech

 

Legal site JD Supra takes a look at the success of the UK government’s stimulus schemes, launched to combat Covid-19.

 

“Each Scheme targets businesses of different sizes and, as such, provides differing levels of UK government-backed support. The Treasury launched:

  • CBILS on March 23. CBILS is available to small and medium enterprises (“SMEs”) with an annual turnover of no more than £45 million. Under CBILS, the UK government provides the relevant accredited lender with a partial guarantee (80%) in respect of the outstanding balance of the relevant facility (subject to an overall cap per lender). Any facility provided under CBILS is up to a maximum amount of £5m.
  • CLBILS on April 20. CBILS is available to businesses with annual turnover of more than £45 million. Facilities of up to £25m are available, via accredited lenders, for businesses with an annual turnover between £45m and £250m. Facilities of up to £200m (in respect of term loans and revolving credit facilities) and £50m (in invoice finance and asset finance facilities) are available to businesses with an annual turnover of more than £250m.[2]
  • BBLS on May 4. BBLS provides loans, through accredited lenders, of between £2,000 and up to 25% of the borrower’s turnover, up to a maximum of £50,000. There are no turnover requirements, but BBLS is targeted at SMEs.
  • The Future Fund on May 20. The Future Fund adopts a different approach to the rest of the Schemes. It is targeted at innovative UK companies with good potential that typically rely on equity investment—i.e., it is more in line with start-up and venture capital financing mechanisms. The Future Fund is an investor-lead Scheme, and the UK government will match the third-party investment (with a minimum of £125,000, up to a maximum of £5m). Such UK government matching investment is by way of subscribing for convertible loan notes issued by the relevant company.

Taking Stock

Nearly three months on, the Schemes have received over one million applications and supported hundreds of thousands of business across the UK.

As of June 14, CBILS had supported a total of 49,247 facilities out of a total of 96,492 applications, equaling an application success rate of 51%. The value of the accepted applications amounts to £10.11bn, averaging just over £205,290 per debt facility.

In contrast, the CLBILS aimed at large corporations has backed facilities in the value of £1.77bn for a total of 279 successful applicants. This totals just over £6.3m per applicant on average. The success rate for CLBILS has so far been lower than that for CBILS: only around 42% of applicants have been approved.

BBLS boasts by far the greatest number of successful applicants: 863,584 small businesses have been able to secure funding through the Scheme. This high number also translates into a high success rate: Just short of 82% of applicants have had their applications approved. Dispensing a total of £26.34bn, businesses have on average obtained £30,500 in finance.

Funding obtained under the Future Fund Scheme has so far totaled £146m. The money has gone to 155 successful companies out of a total of 577 applicants, who have received an average of approximately 940,000. This amounts to a success rate of just under 27%.”

3. UK- FinTech

 

An Experian executive opines on open banking in AltFi:

“Open banking has become one of the most popular adaptations for both fintechs and big finance alike and, following the introduction of the EU’s Second Payment Services Directive (PSD2) in January 2018, has changed the way millions of people view their finances. 

Rob Haslingden has worked at credit reporting agency Experian for over 30 years, most recently as the head of digital propositions, helping Experian deliver open banking to its 6m UK customers. 

Experian was the first Credit Referencing Agency (CRA) to be awarded an open banking licence back in June 2018, just 6 months after the implementation of PSD2.”

4. US – FinTech

Meanwhile, crypto mining (remember that?) is still going on – in a green way.

HIVE Blockchain Technologies Ltd. reported it has put into operation its recently acquired 1,090 Bitmain Antminer T17+ 58 Terahash per second (TH/s) SHA 256 mining machines at its green energy-powered bitcoin mining operation in Quebec,” according to Crowdfundinsider..

“Combined with the recently installed 750 Bitmain Antminer S17+ 73 TH/s machines operational at its Quebec facility, HIVE’s aggregate operating hash rate from this next generation mining equipment is approximately 118 PH/s and is estimated to be operating at a gross mining margin above 40%. These recent investments are among several steps the Company is undertaking to maximize the capacity and efficiency of its 30-megawatt (MW) facility.”

  

5. International – FinTech

Crowdfundinsider has the latest on Wirecard:

“The Wirecard AG saga has gone from bad to worse as allegations of profound fraud cratered the company when its auditor, EY, uncovered a misplaced €1.9 billion in funds. Since the clear operational failure, the former CEO, Marcus Braunhas been arrested and the former COO, Jan Marsalek is said to have absconded to somewhere in Asia.

The new CEO of Wirecard AG, James H. Freis, Jr., is said to have taken a “new approach to investigating the known allegations.”

On Thursday, June 25, 2020, Wirecard filed an application for the opening of insolvency proceedings at the Munich Local Court. In a statement today, the company said that Wirecard’s business activities will be continued. The Management Board is of the opinion that continuation is in the best interests of the creditors.

The Management Board confirmed that the Munich court has assigned Munich lawyer Dr. Michael Jaffé as an “official expert.”

Additionally, Wirecard states that whether insolvency proceedings will be opened is still under review. The company expects a provisional insolvency administrator to be appointed for Wirecard AG shortly.

Wirecard holds many different subsidies and the company states that the business operations of the Group companies including the licensed units are currently ongoing.  It is not year clear if insolvency applications will be filed for subsidiaries of the Wirecard Group.”