Change is coming - FCA P2P rules review

Good luck with that one, dead horse flogging seems to spring to mind as I think about that one!.

Yes, still hard for me to fathom, we have here a known and thoroughly devious & dishonest practice, and nothing gets done about it.

Platform rep has been knocked off top spot elliotn ! Retail investor takes 1st (crowd goes wild) - Leaderboard

A 40% taxpayer shouldn't lose more than 42% of an EIS investment, so 100% wipeout is fortunately rare, and even lower if a capital gain was rolled into the investment (possibly ex post facto). No argument form me that equity crowdfunding is very risky, and that a lot of people on many of the platforms are going to lose even with a diversified portfolio, or that companies that shouldn't be getting funded are getting funded and much of the forecasting is wrong/misleading. 

(Some companies stuff up the EIS process, by mistake or intentionally so some will have a 100% loss, but this seems reasonably rare at least on my medium sized sample!) 

now then, now then, now then ... borrowers setting the price, can we extend that to Tescos please I'd like to set the price of toilet rolls and beer as a start please ...

While they are there perhaps someone could explain zopa's spread as well, they seem to set this as the wind blows as far as i can tell.

Do you recognise that view of the world? I don't. I don't know which platforms they refer to, but on many the offer is take it or leave it and is therefore not much different than P2P. I know that Crowdcube have discussed the price with at least one potential company and I assume that they do so with many. And along with Seedrs there is no price setting function, other than the offer not filling. Syndicate Room also presents a take it or leave option, though, in theory, there has been some price setting done by an external investor and then we are offered the same terms. Exactly how much DD is done by the platform seems hard to discover.

I fail to understand how most of these offers fill. I wouldn't call myself sophisticated in this field, but under the low hurdle of the FCA rules I am. I can't believe how many companies that have virtually no chance of ever making any money and yet receive funding at ridiculous valuations. One possible explanation is that there are many people happy to bet £20 or £50 on a company whose name they like in the same way people bet on the Grand National. I wouldn't criticise them for that. Another explanation if that people are betting small amounts of money now to learn more about how it works (I did something similar I suppose, but with less abandon). The problem with either of these is that if there are very large numbers of people like these any chance of price discovery is lost.

We're actually considering a Seedrs crowdfunding round at the moment so I have some experience with this. Typically the round is filled at least 50% from investors, before listing on the platform. Crowdfunding platforms are then used to facilitate further investment from their user base and from the companies own community. As a large chunk of the investment is agreed prior to being listed, the lead investor and the company generally agree the price. In some instances the crowdfunding platform may get involved but, perhaps only if the valuation was totally unreasonable.