Crowdstacker will attack the “M” of the SME lending market, targeting non-listed, well-established and financially stable businesses. Crowdstacker asserts that such companies represent a more secure investment proposition than the typical clientele of, say, Funding Circle – and yet these larger businesses remain chronically underserved by the banks.
The platform will reportedly offer a maximum loan size of a whopping £50m, far outweighing typical transaction sizes in the UK P2P space. The largest successfully funded peer-to-peer loan to date was completed by Wellesley & Co. in August 2014 – a £10.8m property development loan. Crowdstacker will target both retail and institutional lenders, with a focus on the former, and is committed to delivering the same terms to the entirety of its investor base.
Crowdstacker’s due diligence process hinges on four fundamental strategies. Firstly, the financial position and cash flow of a business, as well as the market within which that business operates, are thoroughly scrutinised. Crowdstacker will on occasion take security in the form of property or equipment, although the platform will also engage in a degree of unsecured lending – but only if a prospective borrower is, in the platform's opinion, sufficiently well-established to wear the risk of an unsecured loan.
Point number 3: Crowdstacker may impose certain restrictions on a borrower. The platform may, for example, require that its investors' money be held within an account overseen by independent administrator, to be drawn down by the borrower only when certain conditions are met. And finally, of course, the platform stresses the importance of assessing the management team of any prospective business borrower.
The first deal to go live on the newly launched platform is for Quanta Group – a nationwide property investment company that purchases run down houses and flats and restores them to former glories, before selling them on. The company has bought and sold over 500 properties in the UK. Quanta is targeting a raise of £3m in order to bolster its monthly purchasing power – ensuring that no quality investment opportunities are missed out on due to a lack of capital.
The loan is to be secured against the properties that Quanta purchases, and will carry the kinds of "restrictions" that are described above. Investors in the Quanta round will be fed regular updates on how their money is being deployed, in the form of information, progress reports and photos of any properties that are purchased using the Crowdstacker loan. The Quanta deal appears to have raised 1% of the desired £3m at present, and has until July 27th to close.
“We see Crowdstacker as the democratisation of higher calibre investment options. We know from our research that the average man or woman on the street isn't yet engaging with investment opportunities such as crowdfunding because they don’t know what it is - or they are put off by not knowing exactly where their money will be spent.”
“The average consumer investor is also put off other sophisticated and less risky investments such as bonds or equities, outside of their standard pensions or managed ISA funds, because they don't understand how they work or they don't have the higher sums of money typically required.”
“Crowdstacker aims to bridge this gap - we’re offering Crowdfunding style simplicity combined with quality investment opportunities; we’ll only work with businesses that have passed our stringent due diligence tests.”