Advisers who attended a workshop on crowdfunding from VCT, EIS and IHT specialists Downing gave a positive reaction to the firm’s new platform targeting advised clients.
At a debate following the presentation, the Downing crowdfunding team, headed by Julia Groves, answered questions from wealth managers and representatives from the regulatory and research communities. Also present was Paul Wilson, Chairman of IFA Magazine Publications. Top amongst the discussion points were questions on risk/reward pricing and regulation.
Groves said: “There is clearly an appetite for this type of investment among intermediaries. However, there is still ambiguity around some fundamental issues for advisers such as permissions, appropriateness, risk and tax.
“We have engaged advisers from the launch of the first crowd bond in March: they are fundamental to the design and build of future crowdfunding products that are suitable for their clients.”
Groves concluded: “We are immensely grateful for the valuable and insights and support in steering the development of this new asset class.”
It was back in March when Downing launched their first crowdfunding targeting advised clients. At the time it offered a one-year fixed rate 6.25% p.a. crowdfunded bond via its new platform. Tested with just a small number of intermediaries, the offer brought in pledges of just around £1m in just the first 24 hours. From then, Downing pushed ahead with the full public launch of its first bond: a one-year solar bond with a total raise of £3.2m. FCA authorised intermediaries were offered a 0.25% introductory commission.
CEO of Downing Tony McGing said at the time: “Crowdfunding has to date been a direct to public market, growing rapidly in size with £2 billion lent to UK businesses in 2015 alone. Downing will also open up this market to investors who are keen to participate, but want the reassurance that the opportunities have been assessed by their financial adviser and are brought to market by a highly respected provider. Downing will provide those advisers with both the information and the incentive they need to do so.
We will apply the same level of due diligence to our crowdfunding offers that we do in our normal venture capital business – giving advisers comfort over the quality control of the offers, from an investment manager they trust.”
Wilson, who was an observer at the breakfast workshop event held at Hawksmoor Guildhall, said that it was good to see a quality firm such as Downing become involved in crowdfunding and specifically target the advised clients. “The great concern in this sector is that due diligence is often carried out a superficial level and credible detailed independent research is not readily available. The Downing platform addresses both of these issues and this point was particularly welcomed by the IFAs around the table.”
Another issue was raised by DFMs who asked if larger offerings could be made available, as they were prepared to invest significant sums.
A number of corporate bonds will be offered by the Downing crowdfunding platform over the coming months.