PROFILE
Foundation (LEYF). They are a nursery provider offering highquality and affordable options, particularly for those from disadvantaged backgrounds. MS: How do you find projects? WT: We are lucky enough to be part of Triodos Bank, getting enquiries through business lending colleagues, we also get a number of projects that come through client referrals and we get a third directly through the platform. Unlike other platforms, we are very much a corporate finance team first and a crowdfunding platform second. We need to understand the business model, growth ambitions, and structure the investment to balance the requirements of the company raising the capital and the prospective investors. Some enquiries just aren’t suitable because they are very early stage, some of the organisations that approach us are not a mission fit and some just aren’t credible financially. MS: Do you get the projects that are too risky for a bank? WT: It’s an opportunity for us because banks are looking at ability to repay, fixed assets or buildings to secure on, whereas we are looking at the cashflow of the company and the ability to repay the debt. We are able to raise unsecured debt whereas the bank will only do secured so some rejected loan applications to the bank can be a good fit for us. MS: What type of returns are investors getting? WT: Returns are around five per cent for some of the charity sevenyear bonds.
Some of the investment opportunities in the past two years have been at around six per cent where there is more risk in the business model. Most of the investments can be held in an Innovative Finance ISA. There is no secondary market, but the bonds and shares are always transferable and we will facilitate transfers if an investor can find someone to sell to. There is no bulletin board, but this is something on our roadmap. We are clear these are buy to hold investments. Since we have been doing this, we have funded coming up to £190m over 15 years for more than 80 projects. MS: Why is social impact investment important? WT: Based on our surveys of investors, people are generally looking for a reasonable financial return, an investment plan and something not correlated to mainstream markets. The reason for coming to us is because of the types of organisation, for example they want to be investing their money into providing homes for people with disabilities or generating clean energy. The 2008 financial crisis was an awakening for people who realised what banks are doing with their money and they could see what happened if the system collapsed. The work of David Attenborough and the COP26 in Glasgow have also caused a massive acceleration of people concerned about the planet and climate change. MS: Are you worried about future regulations? WT: We have seen the development since the Financial Conduct
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Authority (FCA) first brought in regulations. I would say on the whole, the vast majority of the rules were sound and sensible in the early years. Those who work collaboratively through the UK Crowdfunding Association (UKCFA) have been able to create a good dialogue with the FCA. The past 12 months have been more challenging as the FCA tries to navigate its way through the collapses that have actually happened in unregulated sectors. Our main concern is that we need and want to ensure every single one of our investors is clear on the risk he or she is taking. It would be a shame if this type of positive impact investing went back to being the preserve of high-networth or sophisticated investors. We understand consumers need to be protected and want proportionate regulation, we want to ensure we can continue to offer this to everyday retail investors. MS: What’s your outlook for the business? WT: We are focused in the team on helping create positive change in society and enabling organisations to access the capital they need. We want to make sure our platform’s investors have a steady stream of opportunities to choose from throughout the year. For us that means offering seven to 10 investment opportunities ideally in a year. We are going to continue along those lines and will be boosting awareness. We have recently re-launched the platform with a new design and more user-friendly experience. We are keen to grow our presence, particularly in terms of crowdfunding activity.