Ambitious New Entrant to Offer Equity and Debt

By AltFi on Tuesday 19 August 2014

Savings and Investment

Yesterday marked the official launch of the uniquely structured debt and equity platform – Funding Tree.

The FCA regulated Funding Tree claims to be the only platform which affords entrepreneurs the chance to raise capital through both equity and debt-based structures. The platform has placed an initial emphasis on forging lasting relationships with the businesses for which it facilitates funding. An early stage equity fundraise, followed by the seeking of a loan some way down the line, is a natural and oft-followed progression for young businesses. Funding Tree is trying to position itself as a long-term partner in the business lifecycle. The platform has even indicated that more established businesses that have previously raised capital through Funding Tree can return to the site in order to recruit new equity investors to buy out its competitors.

Dillen Iyavoo, CEO and Co-founder, Funding Tree, commented:

"The finance requirements of companies are always changing and, during a typical growth cycle, will often switch from equity to debt and back again. It's these changing demands that we have set out to accommodate with Funding Tree, which is able to offer UK SMEs the type of finance they need when they need it — and get the money to them far quicker than other platforms thanks to our strong capital position. Our goal is to make crowdfunding relationship-based rather than transactional, something the banks, despite their many faults, have always understood.

"With crowdfunding increasingly in the spotlight, we also wanted to stay one step ahead and get FCA approval at outset, which gives investors in our companies not just the potential for great returns but extra peace of mind.”

In terms of practicalities, investors (whether debt or equity) may invest as much as £1 million or as little as £50. Rather than the typical all-or-nothing crowdfunding arrangement, Funding Tree campaigns will only need to hit 90% of their target in order to receive the funds. Joint equity and debt deals can be arranged. The platform also boasts a strong capital base, meaning it is authorized to hold client funds itself. The primary benefit of this structural feature is that entrepreneurs can access money raised far more quickly than they might be able to through other platforms (always within seven days of reaching their fundraising goal).

It’s not uncommon to see an established player within the alternative finance space chance their arm at branching out into a new product offering, but it’s rare to see a platform launch with as diverse a service range as Funding Tree will provide. In fact, newer entrants tend to be much more specialized than the incumbents – typically striving to dominate an underserviced niche. It will be intriguing to see whether Funding Tree’s productivity will mirror the scale of its ambition.

The platform has launched with 7 live pitches – 2 equity, 5 debt. Check them out here. 

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