By John Reynolds on Wednesday 20 November 2019
But potential investors challenge Crowd2Fund about its business.
Crowd2Fund has launched a £1.2m fundraising round after being granted “delayed" Enterprise Investment Scheme (EIS) approval from HMRC.
But potential investors have questioned Crowd2Fund’s growth prospects and its claim to be "unique" in letting investors pick their loans.
The London-based peer-to-peer lender allows investors to lend to entrepreneurs.
The Enterprise Investment Scheme (EIS) provides tax incentives in the form of a variety of income tax and capital gains tax reliefs to investors who invest in smaller, unquoted companies like Crowd2Fund.
“The EIS is very generous, aiming to incentivise investment in businesses, like Crow2Fund, who offer benefits to the wider economy,” Crowd2Fund said.
The £1.2m fundraise will be through the Crowd2Fund website and app and the funds will be used to improve the "credit assessment processes" and grow the business. Up to £12m can be raised via EIS. Existing investors can take part in the £1.2m fundraise.
It will be followed by a £10m institutional fundraise in 2020 by Crowd2Fund.
Crowd2Fund says it plans to grow its investor community beyond 28,000, allowing it to lend more than £210m a year. It currently lends around £20m a year.
Crowd2Fund claims a point of difference to its competitors is that it lets investors pick their loans and investors "can ask the directors questions and even receive rewards and gifts from the businesses they lend to".
There has been a "delay" with EIS authorisation, which is thought to have taken around 12 months.
On the Crowd2Fund website, some potential investors have challenged its growth prospects and its claim to have a unique offering in the market.
One said: "The [Crowd2Fund's] original funding round (Dec 17) saw a valuation of £32m growing to £308m by Jan 2019. £336m by end of 2019 and £1bn by the end of 2022. The current valuation as now stands at just £35m, a tiny increase from the £32m of 2017. Can you explain please?"
Another said: "You said you are unique in debt lending for letting invests pick their loans. Unless I have misunderstood you, there are other platforms letting people self selects business to lend too?"
A third said: "You state that this investment has been granted EIS Authorisation? Just to clarify you are confirming that you have received an Advanced Assurance letter from HRC? If this is correct is this letter available and can it be shared on the platform?"
Crowd2fund provided answers to most of the questions asked by potential investors.