Crowdfunding Bonds

Crowdfunding is a way for many people to invest in a company or project, usually via an online funding platform. This form of investment bridges the funding gap between smaller companies and banks.

In 2015, more than £2bn was raised by UK businesses via crowdfunding and peer-to-peer (P2P) lending, according to research by Cambridge University and Nesta*.

Crowdfunding has become increasingly popular with both investors and companies looking for capital because:

  • Companies no longer have to try and get a large amount of investment from a small number of people, but can cast their net into a much wider pool.
  • Investors can access opportunities they may not have in their current portfolios, offering the potential for greater portfolio diversification. 
  • Investments are typically direct, so investors know where their money is going.

About Downing Crowd

Downing LLP is a long-established FCA-authorised investment manager. In March 2016, it launched its crowdfunding platform, Downing Crowd, offering bonds backed by tangible operational assets. To date, the investments have ranged from country pubs and care homes to sustainable energy projects, such as solar farms, wind farms, hydro power and anaerobic digestion plants.

Downing LLP acts as arranger and security trustee for the bonds, and brings more than 20 years’ investment management experience to these crowdfunding opportunities. Their monitoring fee is contingent on investors’ capital and interest being paid in full.

Key benefits of Downing Crowd Bonds

  • Fixed rates of interest (typically 4.00% - 7.00% p.a.**).
  • Short to medium terms of one to two years.
  • Investments are typically made in companies which are established and growing – not at the start-up stage that crowdfunding is usually associated with.

Key risks

  • Capital is at risk. Bonds are investments, not deposits and investors’ capital is at risk. Returns are not guaranteed and investors’ may not get back the full amount invested.
  • Bonds are not covered by the Financial Services Compensation Scheme (FSCS).
  • Investors are recommended to spread their funds across a number of investments to diversify risk and not to put too much of their capital in a single bond.
  • The bonds are transferable to other members of the Crowdfunding platform but not listed, and investors should assume they will need to hold the bonds for the full term.

*‘Pushing Boundaries’: The 2015 UK Alternative Finance Industry Report by Cambridge University and Nesta, 17 February 2016.

**This includes an early-bird bonus.

What do you do next?

These investment opportunities are only available to members of Downing Crowd

When you are ready to invest:

  1. Complete your profile on the Downing Crowd Website. This will include declaring what type of investor you are, and Downing checking that you have understood the risks.
  2. View the Bond offers and download the relevant Bond Offer Document, paying particular attention to the fees, taxation and risk factors.
  3. Place your order for the Bond/s.
  4. Downing will then complete the necessary ID checks. Downing might need to ask you for further information at this stage.
  5. Make your payment to the Client Money Account. Payments up to £1,000 are only accepted by a one-off direct debit via our payment partner GoCardless. Payments over £1,000 are accepted by cheque or bank transfer.

What happens after the money is raised?

When the Bond target or individual Tranches is reached, the Bond/Tranche will close. Investors will then have a 14-day cooling off period, during which time Downing will complete the Bond paperwork and security agreement with the Borrower on your behalf.

Once the cooling off period is over, we will transfer funds to the borrower on receipt of your Bonds and the signed security agreement. This is when you will start to earn interest.

You will receive a digital copy of your Bond certificate by email, and also be able to download it from
your account on Downing Crowd.

Downing will provide updates in conjunction with your interest payments.

You can log on to the website to see a record of your investments and also to review new offers as they become available.

Downing's charges

Downing makes sure all the information is provided upfront so you can be confident there will be no hidden surprises.

Borrowers will pay Downing a fee for originating the deal, and carrying out the due diligence, assessing the risk and preparing and signing off the offer Documents.

Downing will receive a reduced annual monitoring fee on all Bond applications made during the early bird period and a higher fee on all applications made after the early bird. The annual monitoring fee is contingent on investors having been credited with capital and interest in full, on repayment of the Bond.

Transfers

Downing charges an administration fee of £25 to administer Bond transfers. This fee is not charged where a Bondholder is deceased.

All fees are exclusive of VAT, where applicable.

CREATE AN ACCOUNT HERE TO START INVESTING INTO DOWNING CROWDFUNDING BONDS

Current Bonds

  DDF Property Bond
Bond size £1.75 million
Type Property
Status Development
Asset backed? Yes
Term One year
LTV N/A
Interest Rate 5%
Closing date 20/03/2018
  Warren Energy AD Bond
Bond size £3.95 million
Type Anaerobic Digestion
Status Operational
Asset backed? Yes
Term 18 months
LTV Estimated at 71%
Interest Rate 6.75%
Closing date 14/03/2018