Debt and equity crowdfunding platform launches

Robyn Hall

August 18, 2014

Funding Tree, which is FCA-regulated, is currently the only crowdfunding platform that enables companies to raise capital through either equity or loans and is targeting the SME market.

How it works

So a start-up may begin by raising seed capital through Funding Tree in return for equity and then, a few years later, take out a loan to fund expansion via the same platform. The same company, now established, might then use Funding Tree to find new equity investors to buy out its competitors.

The maximum individual investors can lend or invest via Funding Tree is £1m, the minimum investment/loan size just £50, meaning the platform is open to all investors, not just the higher net worth.

All deals must achieve 90% of their funding target in order to proceed. Joint equity and debt deals are also possible.

Dillen Iyavoo, Funding Tree CEO and co-founder, said: “The finance requirements of companies are always changing and, during a typical growth cycle, will often switch from equity to debt and back again.

“It’s these changing demands that we have set out to accommodate with Funding Tree, which is able to offer UK SMEs the type of finance they need when they need it — and get the money to them far quicker than other platforms thanks to our strong capital position.

“Our goal is to make crowdfunding relationship-based rather than transactional, something the banks, despite their many faults, have always understood.

“With crowdfunding increasingly in the spotlight, we also wanted to stay one step ahead and get FCA approval at outset, which gives investors in our companies not just the potential for great returns but extra peace of mind.”

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