Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
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Risk Summary

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  • You could lose all the money you invest
  • Most investments are shares in start-up businesses or bonds issued by them. Investors in these shares or bonds often lose 100% of the money they invested, as most start-up businesses fail.
  • Checks on the businesses you are investing in, such as how well they are expected to perform, may not have been carried out by the platform you are investing through. You should do your own research before investing.

You won't get your money back quickly

  • Even if the business you invest in is successful, it will likely take several years to get your money back.
  • The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • Start-up businesses very rarely pay you back through dividends. You should not expect to get your money back this way.
  • Some platforms may give you the opportunity to sell your investment early through a 'secondary market' or 'bulletin board', but there is no guarantee you will find a buyer at the price you are willing to sell.

Don't put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments. Learn more here.

The value of your investment can be reduced

  • If your investment is shares, the percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
  • These new shares could have additional rights that your shares don't have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA's website here.

For further information about investment-based crowdfunding, visit the crowdfunding section of the FCA's website here.
Portfolio News
Harvey Hall
· 3 min read
· Updated on

Business Finance Market set to Stimulate the £150bn SME lending Market

Two weeks on from the launch of our latest EIS-eligible investment opportunity with Business Finance Market, we offer an overview of the innovative fintech platform as a whole, exploring their experienced team, unique market proposition and innovative revenue model.  

 

An overview of Business Finance Market

A data-rich fintech platform that stimulates the market for SME lending. By combining a data-rich platform with a re-engineered customer journey that matches lenders and SMEs together to help secure finance, BFM’s proposition is a well-needed addition to its industry, offering a streamlined solution to the broken, outdated and inefficient systems currently present within it. Not only will SMEs experience quicker finance decisions based on addressable market access, but lenders and intermediaries will have themselves a fintech platform at their disposal to help manage the end-to-end application process, improve deal flow, and deliver faster credit decisions.  

A team boasting decades of experience

Business Finance Market was founded by Craig Iley in 2020. Craig has over 35 years of experience in the finance sector as a commercial banker, author, and founder of two neo challenger banks (Atom Bank and Bank North). The BFM team now consists of a group of senior banking specialists and SME business experts who have experienced the frustrations and failures of the current UK SME lending marketplace from both sides. With a deep understanding of the commercial lending market, the team identified a need for a financial lending platform that addresses the significant problems currently experienced by lenders, intermediaries, and SMEs when looking to secure finance. Their combination of industry knowledge and expertise with a powerful fintech platform, will create a clearly differentiated approach to streamlining the SME lending process.    

 

Addressing a strong market need

The overall UK ‘bank based’ business lending market is worth an estimated £166bn. The average loan origination and repayment cycle is approximately 4 to 5 years, which means that the ‘new’ lending requirement or Serviceable Available Market equates conservatively to around one quarter of the Total Available Market, which is circa £33.2bn. The lending market today consists of over c2,000 commercial finance brokers who now handle more than 50% of all UK deal origination. As banks continue to shed front-line staff and close branches, the traditional means of securing bank finance are in decline. With an estimated £22bn funding gap to the 5.9m UK SMEs, more needs to be done to make commercial funding more readily available, particularly at a time when SMEs begin to withdraw their reliance on the recent Government-backed Covid-19 funding schemes. Whilst Covid has certainly exacerbated the situation, the expectations of SMEs have been changing for years. A need for more focused lending products with faster credit decisions and improved funding chances with flexible options has placed pressure on the industry to revisit the methods of traditional lending. In 2019, the then Governor of the Bank of England Mark Carney expressed his concern for the future of UK lending: “Despite facing a £22bn funding gap, almost half of all UK SMEs have no plan to utilise external financing sources.  The Bank is keen to champion a data platform to assist SMEs in applying for, and obtaining, credit with a single ‘data passport’. This means that SMEs could easily apply for finance from a multitude of providers at the click of a button.”

Speaking on Bank of England’s alignment with BFM’s mission, Craig Iley added: “The Bank of England is part of the government apparatus for growing the economy and doing it safely, and they can see that these problems exist. They are guardians of the UK's economic growth story and have a vested interest in making sure that this works.”

As a whole Business Finance Market aims to revolutionise the industry and deliver the vision of a one-stop lending platform where a lack of access to finance is no longer a key critical factor in SME growth and development, with recent industry data and government support suggesting this proposition is well overdue.  

 

An industry-first revenue model

An innovative revenue model centred around SME loan management and delivery, Business Finance Market’s unique multi-pronged profit delivery approach will initially generate revenue across three key channels. Exploring the details of the team’s innovative revenue model, the above video offers an insight into BFM’s direct brokerage, broker platform and introducer revenue channels, that work cohesively to drive profit significantly more efficiently than anything currently available in the market.  

 

A multiple benefit investment opportunity

Alongside prioritising a growth-focused strategy forecasted to deliver 24x money-on-money returns, a multiple stakeholder demand providing benefit across five key areas, and an impact driven mission aimed at supporting the nation’s underserviced SMEs, BFM offers investors a host of valuable tax efficiencies. Being an Enterprise Investment Scheme (EIS) eligible investment opportunity, Business Finance Market affords investors access to a host of valuable tax advantages, from 30% income tax relief to capital gains tax exemption and inheritance tax relief. Mitigating downside risk by minimising their tax bill, investors have the opportunity to plan for the future tax efficiently, contribute to the UK’s record-breaking fintech industry and drive positive impact across Britain's most promising SMEs with our latest high target growth opportunity. 

Chief Executive Officer at GCV, Norm Peterson, added: “SMEs have for many years now found it increasingly difficult to access the finance they need to grow. As the backbone of the UK economy, more focus on supporting SMEs is needed - and this is one of the key reasons we are delighted to be supporting Business Finance Market. The team’s experience in commercial banking and within the SME landscape is first class and it is not only fantastic to witness the output of the team’s progress to date, but it’s immensely exciting to see how they could transform the SME lending landscape over the coming 18 months.”
 

Discover: Live Investment Opportunity with Business Finance Market

 
Driving Growth.
Creating Value.
Delivering Impact.

Backed by

Growth Capital Ventures (GCV) is backed by funds managed by Maven Capital Partners, one of the UK’s leading private equity and alternative asset managers.