Crowd2Fund was one of the first platforms to offer the Innovative Finance ISA (IFISA) and still retains a dominant share of all IFISA funds. Founder and chief executive Chris Hancock explains why simplicity is the key to the company’s success
ISA SEASON is fast approaching, and there has never been more competition in the Innovative Finance ISA (IFISA) market. But almost two years after it launched one of the UK’s first IFISA offerings, Crowd2Fund is still one of the largest IFISA providers in the country. The company’s founder and chief executive Chris Hancock attributes this to the choice they offer their retail investors.
“Investors want more control over their investments,” says Hancock. “Our investors are sophisticated, successful people in their own right. We just make sure that all of our investment information is clear and accurate, and the individual can then make their own decision based on that.”
Unlike other platforms which focus on high-net-worth investors, Crowd2Fund aims to bring the benefits of peer-to-peer investing to everyone. New investors can register for an IFISA within minutes, and with a minimum investment of just £10.
These IFISA investments can be spread across a number of different UK-based business loans, with targeted returns of 8.7 per cent. In the current low-interest rate environment, this is a tempting proposition for many ordinary investors who have struggled to find inflation-beating returns.
Furthermore, the Crowd2Fund model allows investors to choose the businesses that they want to invest in – and if they want to divest from any of these businesses, they can sell off their loans on the Crowd2Fund Exchange.
In a sense, says Hancock, this means that they are offering a “liquid ISA”.
“We trust our investors,” Hancock adds. “We like to present all of our loan information in a very clear, transparent, and honest way so that the individual can make their own decision.”
This honest approach also encourages the platform’s borrowers to open themselves up to scrutiny.
“Our investors can ask questions directly to the businesses, and then the business can reply, and that reply is made public to all the other investors,” says Hancock. “As a result, there is a lot more accountability placed on the entrepreneur or business director not to let his or her investors down. Their investor community are the ones that have supported the business’ growth.”
To date, Crowd2Fund’s transparent and accessible business model has paid off, with thousands of dedicated investors registered with the platform, hundreds of successfully funded business loans, and a ‘bad debt’ target of just one per cent – much lower than many of its rival platforms.
Recently, the ‘big three’ lenders – Zopa, Funding Circle and RateSetter – have entered the IFISA space, a development that Hancock welcomes.
“I think that the market is big enough to have multiple players,” he says.
“We’ve actually got a very different proposition where the ISA is at the core. P2P lending in its original and purest form consists of platforms letting investors choose the businesses they individually want to lend to.
“However, the largest P2P lending platforms in the UK have removed the facility to invest in businesses directly. This restricts choice for investors if they want more control on their P2P investments.”
Looking ahead, Hancock says that his goal is to retain “if not increase” Crowd2Fund’s IFISA market share, by focusing on the things that make his company unique: a transparent and easy-to-use peer-to-peer platform which offers more choice for retail investors.
Click here for more information on Crowd2Fund.