The multi-product alternative finance provider Crowd2fund is to give investors the opportunity to sell their investments and gain early access to their capital.
The latest product named ‘The Exchange’ will not only give the current investors a chance to cash out early but also gives new buyers a chance to pick up discounted investments.
To begin with only debt investments will be tradable, Crowd2Fund plan to open up the marketplace to all investors wishing to buy or sell both debt or equity investments, regardless of where the investment was made.
Commenting on Crowd2Fund’s latest innovation, Chief Executive Chris Hancock said:
“Our exchange is another example of how London-based FinTech brands are creating common sense innovations to help businesses grow and investors earn better returns, securely, and in a regulated way. The Exchange is a simple and free mechanism for exchanging investments which we expect to be largely self-governing with investors having all of the tools they need to make their own decisions.”
The Exchange has a number of opportunities already listed where investors can earn up to 15% APR by purchasing loans that are repaying successfully. Buyers are leveraging the investors need to sell, hence the very high returns achievable. One of the more well-known campaigns is Hummus Bros, which has since gone on to raise £450,000 on another equity crowdfunding platform. The debt listed on the Exchange offers a 10% return, which is a 2% premium on the restaurant’s original listing on the platform.
On the Exchange the seller sets the sale price of the investment. If investors have a strong need to sell there can be a real opportunity for buyers to snap up undervalued assets. Additionally, the Exchange provides buyers with increased visibility with access to the historic performance of the investment that can be reviewed alongside other information related to the company’s performance. It is hoped that this transparency will further increase investor confidence in the rapidly growing sector.
Mr. Hancock added:
“One of the key challenges facing the Crowdfunding and P2P lending sector, which grew by £1.74 billion last year, has been to devise a means by which investors can exit their investments and gain access to their cash. The Exchange will make this possible, for loans which might otherwise take years to repay or for equity which might not attain material value until a company is either acquired or floated on a Stock Exchange at considerable expense.”