Regular readers will be aware we cover equity crowdfunding – the other side of the fence from debt or loan-offer funding – on a regular basis. The latest news, following an aborted merger between Crowdcube and Seedrs (the two leaders in crowd equity funding) is a deal from the USA.
The deal brings together two of the most effective investment platforms in the online capital formation sector. Republic is a full-stack crowdfunding platform offering securities under all available US securities exemptions (Reg CF, Reg D, Reg A+) as well as digital assets. Seedrs, one of the largest crowdfunding platforms in the world, has morphed from a startup platform to raising capital for pre-IPO firms along with operating a successful secondary marketplace.
According to a statement by Seedrs, the deal values Seedrs at approximately $100 million (£75 million). The transaction will be structured as an acquisition by Republic of all of the outstanding share capital of Seedrs Limited.
The lender is seeking to fund claims for financial mis-selling. The term of the loan is 15 months.
Below are some details from the borrower’s pitch – as ever, we’ve done due diligence but cannot warrant or guarantee the truth of the representations. For full detail, register or log in here.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.