In December 2013 I saw the pitch of a promising pre-launch UK p2p lending startup called Landbay pitching on the UK p2p equity platform Seedrs to the crowd. The pitch explained how they planned to do p2p lending secured by property in the UK. I liked the proposal and invested a small amount in Landbay shares.
Since then the founders John Goodall and Gray Stern have been busy. They launched the site in public beta, succeeded in winning former Zopa co-founder James Alexander for their advisory board and managed to get featured on Techcrunch.
They also kept investors updated about their progress. A few days ago I got a 21 page report about the current state and future plans.
Now Landbay is raising a second round from the crowd
Landbay raised capital in a few hours on the weekend in a second SEIS eligible round on Seedrs from the existing shareholders. Landbay raised 81,647 GBP for a 6% equity stake. That’s a valuation of 1.28M GBP (up from 0.62M GBP in first round). To avoid dilution investors from the first round had the right to invest into this new round first.
Now there is a 2.96% equity round – EIS eligible – aiming to raise 41,456 GBP (1.36M valuation).
If you are interested you don’t need to be a UK resident. Just sign up at Seedrs and follow the process. If you are outside of the UK, I recommend using Transferwise, when depositing money in order to reduce currency transfer fees significantly. I think this round will close within days, maybe even hours, so if you are interested you need to be quick.
This article is not an investment advice. Investing in startups bears significant risks, including total loss of investment.
Funding Circle announced that starting May 1st they will do a one month trial offering randomly selected loans as ‘whole loans’ to selected institutional investors on a first come first served basis.
Announcement:
It’s been a fantastic start to the year at Funding Circle. The announcement of additional funding by the Government-backed British Business Bank and the introduction of regulation by the FCA helped to drive a record quarter of lending, with more than £53 million lent to small businesses across the UK – more than two and a half times the amount during the same period of 2013.
At Funding Circle our goal is to build a better financial world by helping as many businesses as possible to access finance, and investors to earn attractive returns.
Over the last few months you will have seen an increase in lending opportunities with record levels of demand from businesses across the UK. Within the next 12 months we expect demand to increase substantially, and our aim over the next few years is to grow to become a significant part of the small business lending market. In the UK, this is an estimated £7.5bn per month market.
To achieve this we want to ensure we have a diverse range of investors at Funding Circle. More investors helps us to attract more businesses, as we have seen from the Government’s involvement. This helps to deliver more lending opportunities for everyone and ensures long-term stability and sustainability for the Funding Circle marketplace.
As you will probably be aware, we have mentioned before that there is a lot of interest from organisations, such as pension funds, insurance companies, family offices and hedge funds, to join Funding Circle to lend.
We have been considering the best way to introduce these new types of investors to the marketplace in a way that is sustainable and also protects the experience of individual investors.
As part of our considerations we have closely followed the developments of the US peer-to-peer lending market over the last 18 months, where larger investors have purchased whole loans rather than lots of individual loan parts. This has shown to us that introducing the ability for investors to buy whole loans is a successful way of creating more lending opportunities for everyone, whilst also protecting individual investors’ Funding Circle experience.
Today we’re announcing that from early May we will be starting a one month ‘whole loans’ trial with a small group of non-bank financial institutions who will lend up to £3m in total. These whole loans will be purchased in full and it will not be possible for individual loan parts to be purchased, as is the case with the ‘partial loans’ that are listed today.
Initially, this will be a closed trial and last for one month beginning 1st May. During the trial whole loans will not be visible on the marketplace; however we will continue to publish details of every loan in our loan book and clearly indicate whether a loan is a whole loan or a partial loan.
While we anticipate most investors will continue to prefer lending on partial loans, once the trial has been successfully completed we will make whole loans available to any interested investors. You can register your interest after the trial by contacting us …
March brought growth for the major p2p lending services. Ratesetter managed to pass Zopa and Funding Circle in newly originated loan volume in the UK. I added one new service to the table. Note that I have switched the reporting currency to Euro as all but two services are located in Europe. Several p2p lending services reached major figures for total loan volume funded since inception:
I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.
Table: P2P Lending Volumes in March 2014. Source: own research Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.
Notice to p2p lending services not listed: If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.
A huge step for Lending Club. Yesterday they launched loans to businesses. Lending Club business loans will range from 15,000 US$ to 100,000 US$ initially, with plans to increase to 300,000 US$ in the future. The loans carry fixed interest rates starting at 5.9% with terms of one to five years and no prepayment penalties. While Lending Club already offered loans that were used for “business purposes” in the past, these were actually consumer loans – the borrower was an individual rather than a company. Obviously the application process and the evaluation of creditworthyness needed to be redesigned for this type of loans.
This will have a big impact on the p2p lending market in the US. It vastly increase the potential market size and will enlarge the choice of loans that investors can lend to.
The UK government decided today that the annual ISA allowance (preferential tax treatment) will be increased from 11,520 to 15,000 GBP. The increased limit will apply to a single ISA, called the New Isa or NISA, which combines the current cash and stocks & shares wrappers.
Under the new regime, individuals will be able to invest the whole amount in cash, compared to present rules where only half of the 11,520 GBP can be invested in cash and the rest in stocks and shares. Current Isa savings will also enjoy the new flexibility. The increased limit will come into force on July 1st.
Osborne said: “We will make Isas simpler by merging the cash and stocks Isas to create a single new Isa. We will make them more flexible by allowing savers to transfer all of the Isas they already have from stocks & shares Isas into cash or the other way around.”
In addition, the Government intends to allow p2p loans to be held within a NISA and will consult on how to implement this later this year. The Government will also explore extending NISA eligibility to debt securities offered via crowdfunding platforms.
Zopa CEO Giles Andrews says: “Peer-to-peer ISAs are the most exciting thing to happen to the industry since Zopa launched back in 2005. This is a game changing moment for all savers. With ISA inclusion now a reality, we expect to see thousands of people transferring their existing ISAs over to Zopa once we launch them. Peer-to-peer ISAs will help provide a high tax free return and bring consumer savings back to life, even better to know is that all lending is covered by our Safeguard fund, so you can earn high returns and feel safe that your money is protected.”
On the announcement, Rhydian Lewis, CEO and founder of Ratesetter has said: “We welcome today’s news that ISA eligibility will be extended to peer-to-peer loans. The government is clearly acknowledging that something must be done to breath fresh life into this failing sector as one of the poorest ISA seasons on record comes to a close. Research has shown that a third of savers would consider P2P ISAs (*Peer-to-Peer Isa Survey, Populus, compiled January 2014)., so this news could truly reinvigorate the ISA sector. The change has the potential to give cash-strapped retirees and young people struggling to get on the property ladder the return on their savings investments that they really need.”
Funding Circle co-founder James Meekings says the move will open up peer-to-peer lending to a new audience. “This news is a huge win for British investors up and down the country, and represents a seminal moment for our industry,” he says. “The inclusion of peer-to-peer lending in ISAs ensures British people earn inflation-beating, tax-free returns whilst helping support the country’s economic recovery.”
New ISAs 1.167 Budget 2014 announces a radical reform of the ISA system. Around half of all UK adults have an ISA, and in order to give these savers greater choice in how they decide to save, the Budget announces that the ISA will be reformed into a New ISA (NISA), which will be a simpler product with equal limits for cash and stocks and shares. This will mean that for the first time ever, savers will be able to transfer previous years’ funds from stocks and shares ISAs into cash ISAs. From now on, savers will have complete flexibility over how they choose to save and invest, within the overall limit. 1.168 The government also wishes to allow people to save more tax-free, so they can see their savings grow year on year. The Budget announces that the annual investment limit for the NISA will be £15,000 a year . This nearly trebles the current limit of £5,760 a year for saving in cash ISAs, and will benefit more than 5 million people who currently reach their cash ISA limit, three-quarters of whom are basic rate taxpayers. It will also increase the stocks and shares limit by nearly a third, from £11,520, and means in total over 6 million people will benefit from the higher overall limit. The government will also raise the limits for Junior ISAs and Child Trust Funds from £3,720 to £4,000. These changes will be introduced from 1 July 2014. 1.169 To further increase the choice that ISA savers have about how they invest, ISA eligibility will be extended to peer-to-peer loans, and all restrictions around the maturity dates of securities held within ISAs will be removed. The government will also explore extending the ISA regime to include debt securities offered by crowdfunding platforms
In the UK 7 innovative finance companies have joined forces and launched the Alternativebusinessfunding.co.uk website to inform SMEs what alternative funding methods they offer. Two p2p lending services Zopa and Funding Circle, two p2p equity (crowdinvesting) services Crowdcube and Seedrs as well as three other services Pension-Led Funding, Platform Black and MarketInvoice participate in this non-bank funders collaberation. These platforms account for 85% of alternative finance for businesses market and have provided more than 580 million GBP to SMEs between them. Screenshot
The information website works like this: 1. Enter the amount of funding you require. 2. After each question you will see the lights change dependant on which funder suits your criteria. 3. At the final question click on any green (or amber) traffic lights for your preferred funder details. 4. All that is left now is for you to approach your funder of choice about sourcing SME finance.
