News Briefing - Crowdfunding, SME And Alternative Finance

crowdfunders: find the crowd that's looking for your product

1. UK – P2P

Peer-to-peer lending compaison site Orca Money has launched an equity crowdfunding campaign to raise £500,000 on Seedrs.

According to P2P Finance News, Orca says the funds raised will help it grow its customer base, integrate with more lenders (Orca allows customers to spread money across many lending platforms using a single account), to enhance product features, develop better research, and prepare for European expansion.

Read the whole story in P2P Finance News 

The P2P Banking blog carries an interview with Orca CEO Iain Niblock 

2. UK – Equity

Seedrs has appointed two new non-executive directors. The appointees have strong (and, we must assume, relevant) skills from very contrasting careers.

Ian McCaig is the former CEO of LastMinute and First Utility, the gas and electricity comparison site. Mark Brooker previously held the position of Chief Operating Officer (COO) at both BetFair and The Trainline. He is also a non-exec at the AA, where he is a member of the audit and risk committees.

Jeff Lynn of Seedrs told Crowdfund Insider:  “I’m delighted to welcome Ian and Mark to Seedrs. They bring with them a wealth of experience and knowledge around growing fast-moving technology businesses in the European market and beyond. They both have a proven track record as trusted leaders, and their experience at some of Europe’s digital giants will be invaluable to us as we continue to scale.”

Read more detailed coverage of this story on Crowdfund Insider, AltFi News, and Private Equity Wire.

3. UK – Science / Health

Britain’s leading general medical journal is expressing concerns that cancer patients are using crowdfunding to pay for treatments that are worthless, ineffective and even harmful.

The most recent issue of The BMJ publishes the results of a year-long investigation by into crowdfunding appeals for cancer patients. These were, for the most part ‘donation’ crowdfunding campaigns, which are not regulated in the UK, and are handled in a very different way from equity fund-raising in healthcare startups. The research was undertaken by Good Thinking, a charity that promotes public understanding of science.

The researchers studied 540 crowdfunding appeals over five years that raised a total of £8million. The BMJ reported the findings thus: 

"[Crowdfunding] has allowed less well-off patients to access expensive, experimental treatments that are not funded by the NHS but have some evidence of benefit. But many fear it has also opened up a new and lucrative revenue stream for cranks, charlatans, and conmen who prey on the vulnerable.”

Project Director Michael Marshall suggested crowdfunding platforms could do more due diligence on treatments being funded, to reduce the risk that well-meaning supporters do not channel money into treatments they do not understand.

“We are concerned that so many UK patients are raising huge sums for treatments which are not evidence-based and which in some cases may even do them harm.”

“Crowdfunding platforms can offer vital help to people who need financial support at difficult times in their lives, but those platforms need to do more to prevent funds being channelled to clinics offering unproven and sometimes dangerous therapies.

“If a fundraiser is for treatment for a serious or life-threatening condition such as cancer, it ought to be reviewed by the fundraising platform before it is sent live, especially if it contains terminology that raises red flags for quackery.”

For more information, read the full article in The BMJ,

The Good Thinking Society also published an article,

Science Based Medicine also covered the story.

4. US – Equity

Do you know a good deferred equity agreement from a bad one? Do you like to KISS or would you rather feel SAFE?

Two academics from the Oxford University Faculty of Law have published a survey.of startup seed financing contracts (and yes, KISS and SAFE are short names for two popular formats.)

The two Oxford men quizzed more than 300 startup lawyers from 32 US states and four Canadian provinces, to assess their understanding and their preferences.

“Nobody seems to know, for example, precisely who is using these new contracts. It is likewise unclear where exactly these agreements are being used. In a very real sense, the discussion about these new contractual forms is occurring in an empirical black hole.”

A short article summarising the findings appears on the Oxford Law Faculty Blog.

A longer peer-referenced paper has been published by University of North Carolina.

5. US – Equity

Chicago’s DePaul University has launched a new crowdfunding portal. VestLo is Illinois’ first intrastate equity crowdfunding portal.

In the US, crowdfunding is regulated by the federal government when it crosses state lines – that’s interstate crowdfunding – but state legislatures can also licence intrastate crowdfunding, for businesses that only raise money locally. Since Chicago alone has over 230,000 small business VestLo has a pretty big market to reach out to.

VestLo offers low investment minimums, as low as $5 for equity offerings while debt or preferred stock offerings have a $50 minimum investment. Illinois startups and small businesses may use the platform to raise up to $4 million in capital.

For more details, check the report in the University newspaper, DePaulia Online.

6. International – Fintech

The FinTech Futures section of BankingTech.com offers a think-piece about the use of technology to change business models in banking and financial services.

"Fintech start-ups want to collaborate in partnership with banks to create new economic models that meet the needs of a radically changing society", Fintech CEO Ivo Weevers is quoted as saying.

Clayton Christensen, the Harvard Business School Professor who quite literally wrote the textbook on disruptive innovation as a competitive force, is also mentioned.

"Traditionally, banks have prospered because their customers, branches, regulation and finances are all in place. Niche business models came second to serving the needs of the mass market. Nowadays, shifting consumer habits are both a demand for change, and a result of it. On the one hand, they are prompted by bank closures, on the other by massive strides in  digitisation and personalisation; by permanent connectivity provided by the mobile internet, and by savvy financial start-ups and tech giants who put user friendly, customer centricity right at the heart of what they do."

This article is recommended for Fintech investors who want to know where entrepreneurs get their ideas from, and which ones are likely to succeed. 

Read "How banks and disruptive fintech start-ups can create new economic models" on BankingTech.com.

7. International – Fintech

Todays sees the start of the world’s first Global Islamic FinTech Summit, in Kuala Lumpur. The GIFS aims to highlight how FinTech is the key to capturing the next generation of Islamic digital economy customers. According to Crowdfund Insider, the summit will feature regional and international leaders in both FinTech and Islamic finance, and will include keynote sessions, key stakeholders, regulatory panels between government agencies, financial institutions and startups.

Read about the Global Islamic FinTech Summit on Crowdfund Insider.

The summit website is https://gifsummit.com/