News Briefing - Crowdfunding, SME And Alternative Finance

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1. UK – FinTech 

 

AltFi reports:

“International payments giant TransferWise is getting in on the digital wealth management space with the announcement that it has secured an FCA license for regulated investment activities. 

The unexpected move will start with TransferWise offering its 8m customers access to “affordable funds from reputable providers”, helping them to move cash into investments. 

It pits the payments startup against the likes of Nutmeg, MoneyBox, Wealthify and Moneyfarm, albeit with a suitable head start given the £2bn currently sitting in TransferWise’s accounts. 

TransferWise is evolving from being a pure payments provider, to the number one alternative for the banking needs of those living and working between countries,” said CEO and co-founder Kristo Käärmann. 

“With £2 billion in deposits we know that people want to hold their money with TransferWise, so we’re very happy to soon provide a way to make a return on that money.” 

TransferWise’s investment product will be protected by FSCS of a value up to £85,000, however as with all investments, their value can rise and fall.”

2. UK – FinTech

More on the fallout from the Wirecard debacle, reported by AltFi:

“Since EY discovered €1.9bn had gone ‘missing’ from Wirecard’s balance sheet, CEO Markus Braun resigned with immediate effect and was then promptly arrested by the German authorities, leaving the fate of Wirecard- and the firms that use it- hanging in the balance. 

Several days later, the German payment processing firm filed for insolvency, leaving many fintechs in the dark, and just a day later the FCA suspended Wirecard’s UK activities, meaning that customer funds were frozen.

Yesterday it was revealed that, after several days teetering on the edge, Wirecard’s UK arm could turn back on services used by fintechs.”

What’s happening to Curve, Glint et al follows.

 

3. UK – AltFi

Bond Review has the latest on the failure of the Blackmore bond scheme:

“Administrators Duff and Phelps have released their initial report into collapsed property minibond scheme Blackmore.

Of £46 million raised from investors, director Patrick McCreesh has estimated in a Statement of Affairs that less than £5 million is likely to be realised to pay them back.

Investors’ money was moved to a series of Special Purpose Vehicles which then invested in property developments. These SPVs borrowed more money from other sources, such as short-term bridging finance providers, whose loans would have been on very high interest rates.

In March 2019 Blackmore stated that “Our business model is entirely on track and current return on capital employed averages 54 per cent”. How it went so quickly from being “entirely on track” and generating 54% ROCE, to being unable to pay interest six months later and collapsing with (at least) 90% losses is unclear.

The £5 million that McCreesh estimates can be realised from Blackmore is less than the £9.2 million that would have been paid to their marketers Surge in commission. Surge ran Blackmore’s back office and marketing efforts, the same job they carried out for London Capital and Finance. (Blackmore’s December 2017 accounts suggested that Surge were paid 20% commission on virtually all the funds raised by Blackmore.)”

 

4. UK – FinTech

 

UK TechNews reports:

“Pactum, an AI-based platform that enables global companies to automate personalised commercial negotiations on a massive scale, has announced the closing of a $3 million seed financing round led by Berlin-based Project A, a V.C. focused on innovative startups, with investments by DocuSign (NASDAQ: DOCU) and other previous Pactum investors.

Pactum was founded in 2019 to help companies uncover hidden value in supplier contracts. Many Fortune Global 2000 companies have thousands of vendors with contracts that have been neglected for long periods of time because the value of the contracts are too small and too numerous to warrant proper procurement specialists’ time.

Pactum autonomously negotiates these supplier contracts, which releases significant capital to the bottom line while also improving terms for vendors. Walmart is one of the first customers Pactum is able to disclose.”

 

 

5. International – FinTech

Crowdfundinsider reports on the problems with true “alternatives” to Bitcoin:

 

Feyyaz Alingan, a Security Consultant at Exeon Analytics and Founder of Blue Alpine Research, a Switzerland-based research firm focused on digital assets, has pointed out several “alternatives” to Bitcoin (BTC).

Alingan, an electrical engineering graduate from ETH Zürichsays that Ethereum (ETH) may be considered a Bitcoin alternative. He notes that Ethereum’s founders, including Vitalik Buterin, felt that the Bitcoin protocol’s “lack of programmability” was one of its downsides or disadvantages.

That’s why they reintroduced smart contracts (or programmable business logic). It’s worth noting that smart contracts weren’t “invented” by Ethereum founders. They were actually first proposed by renowned cryptographer and self-taught legal expert Nick Szabo in the 1990s.

Alingan writes that Bitcoin (BTC) and Ethereum have several issues including their high energy usage (because they use proof of work consensus). Both leading blockchain networks are also plagued with scalability issues, which means they’re only able to process between 5 to 15 transactions per second.

Alingan argues that Bitcoin and Ethereum are now “making room for different interesting altcoins (alternative coins) that allow increased speed and scalability” while using different types of consensus algorithms such as proof of stake, delegated proof of stake (DPoS), and many others.”