News Briefing - Crowdfunding, SME And Alternative Finance

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1. UK – FinTech

The Mail Online reports:

“Profits have again eluded the crowdfunding business founded by former fund manager Nicola Horlick as cautious investors consider the coronavirus. 

Money & Co, which matches wealthy investors who want to lend money with businesses which want to borrow, said customers funnelled a fraction of their usual savings into Innovative Finance ISAs (IFISAs). 

IFISAs are a tax-efficient way for savers to lend. But Horlick said: 'We didn't see the normal influx this year,' and speculated this might be because investors were opting for stocks-and-shares ISAs because they had seen prices fall and were betting on a bounce. 

'The difference on previous years was vast – we received about 5 per cent of the ISA money we would usually get.' 

Money & Co lost £420,000 in the year to March 31, which Horlick described as 'frustrating' since she predicted it would have had its first profitable year had coronavirus not struck. 

She expects to make a profit in the year to March 2021, but is cautious about the UK's economic prospects. Money & Co is moving from lending to small firms to looking at litigation finance – where loans fund a legal case and investors receive a cut of winnings – and loans to record labels and artists which are secured against music rights to music. 

Horlick, who was dubbed superwoman for her exploits, believes many firms which have taken on coronavirus debts will be unable to pay them back, and will need equity investment. 

She said: 'I think there will be a day of reckoning. The Government needs to rethink its approach – get a team of people together who understand private equity and venture capital who will know what to do with these debt-laden businesses.'”

 

2. UK – FinTech

AltFi reports:

“UK fintechs are remaining tight-lipped on whether they will take up the government’s offer of thousands of pounds for returning furloughed workers to their jobs.

The government’s job retention bonus scheme pays businesses £1,000 for each furloughed worker brought back to work and kept in post until January.

The government is hoping the job retention bonus scheme will help prevent a spike in unemployment when the furlough scheme, which has helped pay wages, finishes in October.

Fintechs have taken advantage of the furlough scheme during the pandemic, but the bulk of those contacted by AltFi would not be drawn on whether they would be applying for the bonus scheme.”

 

3. UK – FinTech

 

Digital wealth manager Scalable Capital has closed a €50m Series D funding round, its biggest round to-date. AltFi reports:

“The round was comprised solely of existing investors, including BlackRock, HV Holtzbrinck Ventures, which has invested in the likes of HelloFresh, SumUp and Yapily and Tengelmann Ventures, an investor in fellow fintech Klarna. 

Erik Podzuweit, co-founder and co-CEO of Scalable Capital, said: “In times of Covid-19, our funding round is a powerful signal; it shows that our focused, digital business model is convincing investors.” 

 “We will use the additional capital to expand our position as the market leader in digital wealth management and to reach new customer segments with the broker.” 

To date, Scalable Capital has raised €116m with this latest round being used to help the firm expand its wealth management platform and its B2B business offerings.”

 

4. UK – FinTech

 

Growth Street goes… Insider Media reports:

“Growth Street is to wind down the business once its Resolution Event is complete. The company said the decision has been made by the board with the support of the executive team and major shareholders. 

The entire focus of the business will now be on supporting its borrowers to find alternative sources of finance while ensuring that funds are returned to its investors.

During the wind-down, Growth Street will retain a core team to "ensure it proceeds effectively".

5. International – FinTech

CrowdfundInsider runs a tale on the health of the Australian direct lending market.

Birchal, the top investment crowdfunding platform in Australia, has published a report updating on progress being made in Australia regarding “crowd sourced funding” (CSF) as it is called in Australia.

According to Birchal, since the commencement of Australia’s CSF industry in 2018, over 80 Australian SMEs have collectively raised over $53 million by issuing securities online under the ecosystem. The report states that there are now over 44 thousand investors that have participated in CSF offers, and this number is growing even in the midst of the ongoing COVID-19 pandemic.

The report notes that Australia was “late to the party” among its global peers in establishing a retail equity crowdfunding regime. Even though Australia may have been behind jurisdictions like the UK, the country claims that it is already leading the Asia-Pacific region in terms of funds raised and deals completed.”