Six months since the launch of the Innovative Finance ISA (IFISA), Karteek Patel, CEO of Crowdstacker takes a look at how it is creating a wave of new P2P investors, and a significant number are also moving money from other types of ISA.
In the six months since the new IFISA launched an examination of our data clearly shows it is attracting large numbers of new investors to the interest rates offered by Crowdstacker. Plus it also means the IFISA is potentially opening up access to billions of pounds of financing for UK SMEs.
We can see that for every ten IFISA investments made, nine come from people who have not invested with the platform before. The average amount invested using the IFISA is £7,700. And just under one in five (18%) have chosen to realise the full tax benefits for their P2P investments by using their full annual allowance of £15,240 in the IFISA.
2015-16 Government data shows that £80 billion was invested via other types of ISA, typically in cash accounts or stocks and shares.* But the popularity of the Innovative Finance ISA suggests that within a few years a sizeable portion of this could be providing a direct boost to the UK economy by being invested straight into growing UK SMEs.
The data also reveals some other interesting patterns:
- The IFISA appeals to all age groups ranging from investors in their 20s through to those in retirement
- Investment levels using the IFISA have remained steady in each month since launch
- Interestingly nearly one in ten (7%) people have taken the opportunity to move money from other types of ISA investment
To date only a handful of platforms have the full FCA authorisation and HMRC license required to offer the IFISA. But according to the regular Nesta report the alternative finance industry already creates £3.2 billion investment annually**.
IFISA money was, for example, a big contributor to one of Crowdstacker’s current raises, for BurningNight; an exciting, innovative and already very successful business which operates bars in City centres in the North and West of Britain. All the money we raise for businesses comes from everyday investors and roughly half was invested by people using our Innovative Finance ISA, helping us hit £1million within just a couple of weeks of launch.
The Crowdstacker proposition is about helping investors make informed choices. We aim to do this by taking a bespoke approach to due diligence, meaning we can use tried and tested methods of interrogating a business’s financial health, which includes standard credit-checking right up to management interviews and forensic reviews of accounts.
Loans are then structured in a way that aims to offer a good level of security to lenders, for example first charge over easily accessible assets valued at multiple times more than the actual loan. And offering an interest rate which is sustainable for the business in its current sector climate, and attractive to investors who are looking for higher returns than those offered by other types of investment.
Click here to find the answers to your IFISA FAQs and apply today.
Please note all data used in this release has been sourced from Crowdstacker’s analysis of investment in its own IFISA.
*P 10 https://www.gov.uk/government/uploads/system/uploads/