Good news comes from our cousins on the equity side of the crowdfunding fence. Seedrs, a very big player in equity raises, has started a secondary market in the shares it raises funds for. At Money&Co., we see this as welcome sign that crowdfunding is maturing and entering the mainstream of financial services.
Our friends at The Scotsman report the news this way: "Until now, shares that the public have bought at very early stage crowdfunding of nascent entrepreneurial businesses have been difficult to trade before they exit via a flotation or sale of the business.
"'The long-term nature of this asset class means the vast majority remain illiquid for some time,' said Seedrs, which has seen tennis star Sir Andy Murray make a string of investments in start-up firms via its platform.
"'The Seedrs secondary market seeks to change that. It will allow investors the opportunity to sell shares in companies they've invested in via Seedrs to other investors,' the group added."
Equity v P2P Crowdfunding
Equity raises are typically for start-ups. These very young companies can provide great returns, but they can also fail. The Financial Times has published several pieces on this topic. This article cites a one-in-five failure rate. Peer-to-peer (P2P) loan crowdfunding usually involves more mature companies. At Money&Co., we demand a strong track record of profitability, take a charge on the assets of the borrowing company, and typically deal with companies that have been trading for more than 12 years. And, of course, we've had a vigorous secondary market ever since we started facilitating loans on the platform, three years ago.
Current offerings have A+ (a property-backed offer) and A risk ratings, and bidding activity to fill the funding requirement is strong. Login or register for more detail.
P2P & Risk
If you haven't made a loan via Money&Co. before, please read the risk warnings and the FAQ section. You may also wish to consult a financial adviser before making an investment.