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Crowdstacker Innovative Finance ISA
Crowdstacker is one of the few peer-to-peer companies which has received full FCA authorisation, and as such is able to offer an Innovative Finance ISA. They have published some data which suggests that 90% of customers opening an IF ISA are new to the platform.
Here is the full press release:
THE new Innovative Finance ISA (IFISA) is attracting large numbers of new investors to Peer to Peer investing, and potentially opening up access to billions of pounds of financing for UK SMEs, it is revealed today.
The data is taken from a six-month summary of investment information issued by one of the few Peer to Peer (P2P) platforms authorised to offer an IFISA, since it was introduced in April 2016.
It shows that for every ten IFISA investments made, nine come from investors who have not invested with the platform before. The average amount invested using the IFISA is £7,700. And just under one in five (18%) have chosen to realise the full tax benefits for their P2P investments by using their full annual allowance of £15,240 in the IFISA.
“2015-16 Government data shows that £80 billion was invested via other types of ISA, typically in cash accounts or stocks and shares. But the popularity of the IFISA suggests that within a few years a sizeable portion of this could be providing a direct boost to the UK economy by being invested straight into growing UK SMEs,” comments Karteek Patel, CEO of Crowdstacker, the platform which has provided the IFISA data.
The data also reveals some other interesting patterns:
- The IFISA appeals to all age groups ranging from investors in their 20s through to those in retirement
- Investment levels using the IFISA have remained steady in each month since launch
- Interestingly nearly one in ten (7%) people have taken the opportunity to move money from other types of ISA investment.
To date only a handful of platforms have the full FCA authorisation and HMRC license required to offer the IFISA. But according to the regular Nesta report the alternative finance industry already creates £3.2 billion investment annually.
“IFISA money was, for example, a big contributor to one of our current raises, for BurningNight; an exciting, innovative and already very successful business which operates bars in City centres in the North and West of Britain,” explains Karteek. “All the money we raise for businesses comes from everyday investors and roughly half was invested by people using our Innovative Finance ISA, helping us hit £1 million within just a couple of weeks of launch.
“But as other platforms are able to offer the IFISA and awareness about it grows further, we expect to see the success of this investment wrapper grow even more. It could be a great investment for consumers who have a variety of choice about how their money is invested depending on the investment structure used by each platform.”
Crowdstacker’s IFISA is structured in a similar way to a stocks and shares ISA. Investors can deposit some or all of their £15,240 annual ISA allowance and then choose specific businesses featured on the platform to lend to. As with a stocks and shares ISA, these investments can be reviewed in depth with a thorough explanation of each business, its financial track record, and market opportunities to sustain and grow financial health.
“The Crowdstacker proposition is about helping investors make informed choices. We aim to do this by taking a bespoke approach to due diligence, meaning we can use tried and tested methods of interrogating a business’s financial health, which includes standard credit-checking right up to management interviews and forensic reviews of accounts,” continues Karteek.
“Loans are then structured in a way that aims to offer a good level of security to lenders, for example first charge over easily accessible assets valued at multiple times more than the actual loan. And offering an interest rate which is sustainable for the business in its current sector climate, and attractive to investors who are looking for higher returns than those offered by other types of investment,” concludes Karteek.
Lending to businesses can be rewarding, but it involves a number of risks. If you lend through Crowdstacker, please be aware that you may lose all of what you lend and that there is currently no active secondary market for the underlying loan to be transferred if you need access to the capital. You should not lend more than you are prepared to lose. For more information consult our full risk warning https://crowdstacker.com/risk-warning. Money lent is not insured or covered by the Financial Services Compensation Scheme.
Crowdstacker Ltd. is authorised and regulated by the Financial Conduct Authority (frn. 648742).
Please note all data used in this release has been sourced from Crowdstacker’s analysis of investment in its own IFISA.