- Investment sought:
- Equity offered:
Crowdstacker is an award winning FCA regulated online alternative investment platform, providing ISA eligible P2P loans, Bonds and Loan Notes.
We were amongst the earliest P2P platforms to gain full permission from the FCA, and one of the first to launch an Innovative Finance ISA on 6th April 2016. Later in 2017 we became a record breaker when we completed the UK's largest crowdfunded P2P loan to date, funding over £15m.
The UK's online alternative finance market has grown from virtually nothing ten years ago to £4.58bn in 2016. That's a growth of 45% between 2015-2016. With the introduction of the Innovative Finance ISA in April 2016, we expect that this growth will rapidly accelerate.
At Crowdstacker, we are right at the forefront of these important changes happening in financial technology and alternative investing.
Now the next phase of development is about to begin and to support our plans we are looking to raise a minimum funding of £800k.
For some time now, the income on offer from annuities and savings has been disappointing and in some cases returning negative real returns for investors. As a result, we've seen the 'hunt for yield' become a dominant investment theme as many people have broadened and deepened where they look for yield.
Alternative assets, such as direct lending to businesses, can provide a source of income for investors and help to diversify across asset classes.
Paradoxically, established SMEs experiencing high levels of growth can have limited access to larger funding sources.
Crowdstacker looks to provide a more bespoke funding solution for high growth SMEs by connecting them to investors looking to pick and choose businesses to lend to from a curated selection.
Substantial accomplishments to date
Since launch in June 2015, Crowdstacker has won multiple awards, lent over £45m and paid back over £10m of capital and interest.
Key statistics and achievements are as follows:
- In just two years the platform has been honoured with nine leading industry awards, including two for our Innovative Finance ISA.
- The P2PFA has recently invited Crowdstacker onto its board to help shape the future of the P2P lending industry.
- Over £45m has been raised on the platform via a variety of investments for exciting and successful British businesses to help them grow and develop. Over £17m of this was in the financial year ending March 2018.
- Investors have received over £10m back in capital and interest payments, and so far there have been 0% defaults.
- There are over 7,500 members of Crowdstacker looking for investment opportunities.
- We completed the largest P2P loan (and crowdfunding deal) in the UK raising over £15m directly from individual investors.
- In the past year we have originated on average around £10m of secured business loan enquiries per month.
- We generated over £1.3m of revenue in the 2017/18 financial year from over £400,000 of revenue in 2015/16 year, a growth of over 200%.
- We have a skilled, dedicated and enthusiastic team of 12.
- Our CEO was named in p2pfinancenews' inaugural P2P Power 50 in 2017.
We believe that businesses are starting to realise the potential of alternative finance.
Similarly, investors are attracted to the potential of alternative investing.
And we believe Crowdstacker is perfectly placed to lead this.
For FY 2017/18 Crowdstacker had revenues of over £1.3m* and we hope FY 2018/19 will be our busiest lending period on record.
We typically charge the business borrower an upfront fee for the due diligence and product structuring plus a percentage arrangement fee of the investment raised. We also charge an annual loan monitoring and servicing fee.
Lenders do not pay any fees.
*Source: audited financial statements
Use of proceeds
Our initial goal was to prove we can meet the larger finance required by established businesses and to deliver great opportunities to investors that we hope will in the long term deliver more stable, risk-adjusted returns. We believe that we are achieving this.
Our next goal has been to develop strategic relationships with traditional corporate finance advisors and top UK accountancy firms. We believe that this has helped our new business pipeline to flourish.
Our future plans are to increase awareness and usage by investors and businesses. To help deliver this, we plan to develop a wider suite of investment structures that can be managed and administrated through our platform.
It is anticipated that the funds raised will be allocated as outlined below:
- Staff expansion - 30%.
- Technology - 40%.
- Sales and Marketing - 30%.
With these additional funds, we expect to grow cumulative lending.
NB: Please refer to the Key Information document attached to the campaign for further important information about Crowdstacker and this funding round.
We target companies requiring bespoke financing of between £1m-£20m.
We target investors looking for yield or income. The innovative Finance ISA has opened up a £585bn+ investment pool of predominately income investors (as of 2017). 46% of these funds are held in cash ISAs.
Characteristics of target market
- Our target market is high growth companies in the UK that can offer security for loans and afford to repay them from their profits and cash flows.
- The target high growth businesses are typically generating over £1m of revenues
- 2.5% of businesses in the UK borrowed from alternative finance debt platforms in 2016, so there's plenty of potential for growth as awareness of the availability of alternative finance increases.
- Peer to peer business lending, at £1.2 billion, as a proportion of total new loans to SMEs by banks was 6.56% in 2016. That made the total SME debt funding market size over £18 billion.
UK investors told us that they are searching for:
1. A fixed income.
2. Investment choice and
3. Tax efficiency.
However, they plan to invest in 2017/18:
26% in cash ISAs.
8% in stocks and shares ISA and
1% in Innovative Finance ISA.
So, although the Innovative Finance ISA could be interesting for these investors, in our experience, awareness of the Innovative Finance ISA is still very low. If 10% of Adult ISAs were moved to an IFISA, this represents a £58.5bn influx of lending capital.
- We attract investors through advertising and PR activity in the national press and online. We are also listed on financial aggregator websites such as orcamoney.com and innovativefinanceisa.org.uk.
- We are very active in the press with regular mentions in the national press including Financial Times, The Times, CityAM, The Daily Telegraph and more.
- We look to attract businesses through direct enquires and referrals. We have dedicated staff in the business to carry out initial vetting. This ensures that only creditworthy applications reach the credit team.
- We receive referrals from corporate finance houses, legal firms and accountancy firms. We have successfully launched our first product through one of these relationships and are evaluating a number of further businesses.
We see our target market for borrowers and investors as very different to typical peer-to-peer platforms and our offering is a mix of old with the efficiency of new technology.
Our investors typically invest much larger sums into each business with an average of over £5,000. Our customer service is in tune with the requirements of our investors and we pride ourselves on delivering a 'real person' service to investors. We believe our customer reviews on Trustpilot show our success.
Our target businesses are typically further in their growth cycle to our competitors and thus have larger funding requirements. This allows us to carry out a due diligence process that we would liken to that of a corporate finance house.
We target these businesses as we believe that, as they are more established, they can provide greater security, stability, and experience to weather downturns in their sectors, thus hopefully providing better security for investors.