Downing Crowd launched its Innovative Finance ISA this month, as investors rush to invest their ISA allowance before the tax-year ends on 5 April.
The IFISA was launched in April 2016 and allows individuals to include investments from crowdfunding and peer-to-peer lenders in their allowance of £15,240 allowance, which will rise to £20,000 in April. Investors can invest in a mix of cash and stock ISA’s or the IFISA. Investments from other ISAs can also be transferred over to other types of ISAs.
The platform offers investments through Crowd Bonds which are similar to P2P in that investors lend directly to businesses, with a firm’s operational asset as collateral. The main difference is that investors receive an individual debenture or security.
“Different types of crowdfunding often get lumped together as being too risky but Crowd Bonds are actually a very simple form of lending that can, in many ways, be less complex and risky than traditional equity investing,” said Julia Groves, partner and head of crowdfunding at Downing.
“A Crowd Bond platform offers a small number of larger scale investments, allowing us to carry out higher levels of due diligence, and provide a higher level of disclosure, which helps the end investor know where their money is going,” she added.
The first bond offer the company plans to include in the IFISA is £1.39m funding for Alternate Energies Limited, which owns an established portfolio of over 300 solar power or PV systems on residential buildings owned by Colchester Borough Council. Downing does not charge any fees for opening an IFSA.
Downing Crowd is part of Downing LLP and was launched in May 2016. The firm has 35,000 investors and over £800m of funds under management. The platform has launched 11 Crowd Bonds and raised over £19m for small UK businesses.