Chris Hancock, founder and chief executive of Crowd2Fund, explains how the platform’s Innovative Finance ISA offers more than competitive returns
AS ONE of the earliest peer-to-peer platforms to bring its Innovative Finance ISA (IFISA) to market, Crowd2Fund is synonymous with the tax wrapper heralded as the sector’s passport into mainstream investing.
With an increasing number of IFISA providers now entering the space, founder and chief executive Chris Hancock is confident that the business lender’s unique proposition helps them stand apart from the competition.
“The IFISA has enabled innovative platforms to challenge the older P2P lenders and offer more choice to investors,” Hancock explains.
“With many of the earlier players, you’re not able to choose different lending opportunities.
“For us, it’s crucially about having lots of transparent information about the businesses and being able to make a balanced investment decision yourself. We are a genuine execution-only P2P platform.”
Crowd2Fund puts a strong emphasis on community and connectivity between the investor and the borrower. The platform is purely open to private investors who can actively choose which opportunities to put their money into. They can even contact the businesses they plan to lend to with any queries.
The relationship between the investor and the borrower does not end with the loan. The investor may become a client of that business or decide to make an equity investment further down the line, as Hancock explains.
“From an investor perspective, we’re offering more because you’re not just giving us a pot of money that’s aligned to the lower price of institutional wholesale debt like a lot of the other platforms,” he says.
“As a group of investors, you’re helping that business; you might tell your friends about it or you might reinvest in the future. That’s what’s really valuable.”
Adding to Crowd2Fund’s strong community ethos is the success of its secondary market, called the Exchange.
While P2P traditionally has a reputation for poor liquidity, Crowd2Fund’s investors have been extremely active in trading loans with each other.
“People love trading on the Exchange because it introduces that gamification where they can buy and sell investments at a rate they decide upon,” Hancock affirms.
“As well as boosting liquidity, it helps people diversify their portfolio which is so important to manage risk exposure.”
With impressive 8.7 per cent target returns, tax-free income and a wealth of information about the promising businesses that their money will support, the attraction of Crowd2Fund’s IFISA is obvious.
“It’s for people who want to get into investing and have more control on their capital,” asserts Hancock. “Rather than simply choosing a higher rate of return, they’re choosing to support people and entrepreneurs in growing British businesses that are the lifeblood of the economy.”
Unlike some older players that are only just starting to enter the IFISA market, Crowd2Fund was built with the IFISA at its very core and will be entering a third IFISA financial tax offering this coming April, Hancock explains.
“We’ve always offered IFISAs so our focus is very clear, whereas for some of the other platforms it’s more of a bolt-on product,” he says.
And the IFISA market is far from reaching its potential.
“There are 13 million people in the UK with an ISA, the market has a collective value of around £480bn and approximately £80bn of that is being transferred every year,” Hancock states.
“Considering that the entire P2P lending market is worth £2bn a year in the UK and we’re opening up a pot of £480bn, it really puts the potential scale of the sector into perspective.”
Click here for more information on Crowd2Fund.