Finance growth

Collaborative finance – the digital finance revolution

Crowdfunding. Mini-bonds. Peer-to-peer (P2P). Marketplace lending. Collaborative finance… what are these and are they relevant to the mid-market CFO?

They all involve the act of fundraising directly from the 'crowd' – typically individual or retail investors – and bypassing institutional finance. New and cheap technology platforms provide the basis for this disintermediation. It seems you can't pick up a paper without reading about the 'digital disrupters' and how they've been used by the likes of John Lewis and BrewDog to raise capital. 

But surely the crowd can't be the source of significant capital? Wrong. That's why the mid-market CFO needs to sit up and take notice.

The average 'crowd' funds raised in the UK has increased by 47% in first half of 2015 and the UK is the centre of crowdfunding globally, with more crowd finance being raised in the UK than anywhere else in the world.

Let's explore if collaborative finance can work for you through the following short summary videos on key collaborative finance topics. We recently completed our collaborative financing series with a Q&A webinar where we answered questions submitted by the ‘crowd’. 

Panel Q&A

Daniel Demir was joined by Rupert Lee-Browne, CEO, Caxton FX; David Walker, Partner, Memery Crystal; and James Codling, Founder & CEO, Venture Founders. 

Questions discussed:

  • What does the ideal candidate for a mini-bond or crowdfunding look like?
  • What is unique that crowdfunding has to offer?
  • How much can realistically be raised from collaborative finance options?
  • How easy is it to obtain follow-up funding?
  • Why opt to use crowdfunding or mini-bonds, (dealing with many lenders/investors) v one institution?
  • How transparent do business leaders need to be, in terms of use of the funds to tempt investors?
  • How confident are we that collaborative finance will last and not go the way of other failed markets?

Equity crowdfunding

Sarah Abrahams was joined by Matt Cooper, Commercial Director, Crowdcube; James Codling, Founder and CEO, Venture Founders; and Emily Mackay, CEO and Founder, Crowdsurfer.

The panel discussed:

  • an overview of the equity crowdfunding process
  • the types of business that are more suitable for equity crowdfunding
  • the issue of sensible valuation of companies associated with equity crowdfunding.

Mini-bonds

Jen Clarke was joined by Rupert Lee-Browne, CEO, Caxton FX and David Walker, Partner, Memery Crystal.

The panel discussed:

  • how the concept of mini-bonds is addressing funding needs
  • mini-bonds versus traditional funding routes and the marketing process
  • the trends in companies issuing mini-bonds (sector, size of issue, target investor base).

 

Peer-to-peer lending

Daniel Demir was joined by Daniel Sinclair-Taylor, National Partnerships Manager, Funding Circle; Mark Williams, Head of Commercial Credit, Ratesetter; and Emily Mackay, CEO and Founder, Crowdsurfer.  

The panel discussed:

  • an overview of the peer-to-peer market and current trends
  • how the application process differs for a peer-to-peer loan compared to traditional finance
  • the amount a corporate business can borrow from a peer-to-peer lender and the typical loan structure.