Investing in small companies refers to:
Investing in ordinary shares offered by private companies. These will often be connected to government tax incentives such as SEIS/EIS.
Investing in loan notes issued by private companies or listed public companies.
No, we do not charge investors any fees.
Investing in shares of private companies in the early stages of their life cycle is inherently risky but also rewarding. The government has recognised this risk and has offered valuable tax incentives to mitigate the risk although this should not be your sole consideration when considering making an investment. Crowd for Angels investors should adopt a portfolio approach and never invest more than they can afford to lose.
Loan notes have a defined interest rate payable on the repayment date. Many of our loans are designed to have less than two years with interest payments, which makes the investments less risky than making investments that are held for a longer term. In addition, these can be monitored when issued by listed PLC's.
Investing in small companies carries a high risk as historically many of them fail. Spreading your investments among a variety of companies gives you a higher chance of picking a winner and gaining profit from your overall investments. Diversification also gives Crowd for Angels investors peace of mind as putting all your money into one basket could be too risky.
Crowd for Angels (UK) limited (company number: 03064807) is authorised and regulated by the Financial Conduct Authority. Our reference number is 176508.
Your investment is not completed until the company has raised at least its minimum funding target. When you make your investment, the committed funds are held securely in a UK bank account. Once the funding target is raised, the committed funds represent the investment amount and are transferred to the company from the bank account. You then become a beneficial shareholder subject to a nominee arrangement. If the minimum funding target is not met, your committed funds will be returned to your Crowd for Angels account.
At Crowd for Angels the minimum investment is £25 in both equity pitches and debt pitches but companies can specify the lowest amount they are willing to accept. The maximum, however, is solely determined by the company’s funding target. The maximum can be met by a sole investor.
This is a decision made by companies on an individual basis. Certain companies prefer to have fewer investors investing larger amounts and so they choose to increase the minimum investment threshold.
This is not possible. Once the pitch is fully funded to the maximum funding target, it will automatically close allowing for no additional funding to be committed.
There are four ways of making a payment when making an investment at Crowd for Angels:
You can use a Visa, Mastercard or Maestro debit card to pay for the investments.
By transferring in funds from your bank account to your Crowd for Angels account.
By transferring in funds to your Crowd for Angels account using a direct debit form.
At a specified date via a pre set-up direct debit.
No. We display a list of pitches that you have invested in on your public Crowd for Angels profile but we do not disclose how much money you have committed or invested in each pitch.
Your investments will be held in the name of a nominee appointed by Crowd for Angels. The company will deal directly with Crowd for Angels who will be the conduit for passing information and for handling distributions to Crowd for Angels investors.
Yes. You are able to start a discussion on the company’s pitch by asking any questions regarding its business. This is done via the Crowd for Angels discussion board and it is then up to the company to reply. Please note that listed PLCs are not always able to answer questions for legal reasons.
Yes. If you have committed funds or you are following a pitch you will be informed when a company has reached its minimum and maximum funding target.
You can cancel your payment at any time up until the minimum funding target is reached. After the minimum funding target is reached you can cancel your payment at any time up to seven (7) days. If the maximum funding target is reached, you can cancel a payment at any time up to seven (7) days. Where the maximum funding target is not reached during the remainder of the pitch, you can cancel your payment up to seven (7) days after the expiry of the pitch.
Yes, however, people located in territories other than the UK should consult their professional advisors to ensure any investment is compliant under their local laws and jurisdictions before they invest in any pitch on the Crowd for Angels platform.
No, we do not accept cheques.
No funds are taken from investors at Crowd for Angels until the funding target is reached. During the funding period, investors at Crowd for Angels commit to invest but are not deemed to have invested until the funding target is reached. Until that date, these amounts are shown as 'committed funds' in your Crowd for Angels account. Once the minimum funding target is reached, your committed funds will be referred to as investments and will be named 'my investments' in your Crowd for Angels account.
While we are committed to bringing investors at Crowd for Angels the best possible pitches we are not allowed for legal and regulatory reasons to advise investors at Crowd for Angels on any investments. Crowd for Angels does not recommend or endorse any companies.
Any information provided by a company will be reviewed by Crowd for Angels and where appropriate we will ask for documents to support the data submitted. However, investors at Crowd for Angels should rely on their own judgement, knowledge and expertise to decide if the company will be a success or not.
Investors at Crowd for Angels can also benefit from their ability to connect with the company and other potential investors on the Crowd for Angels platform. This process of taking into account the collective opinion of a group of individuals rather than a single expert to answer a question is known as the "wisdom of the crowd". This is a useful tool for investors at Crowd for Angels looking to do their due diligence.
You must become a member on the Crowd for Angels platform to access and to be authorised to invest. Furthermore, you must self-certify that:
(a) You are a Sophisticated Investor (either on behalf of yourself as an individual investor or on behalf of a legal entity as an Institutional Investor); or,
(b) You are a certified High Net Worth Individual; or,
(c) You will not invest more than 10% of your net investible portfolio in unlisted shares or loan notes (excluding your primary residence, pensions and life cover).
The 'wisdom of the crowd' is the process of taking into account the collective opinion of a group of individuals rather than a single expert to answer questions. This is a useful tool for investors at Crowd for Angels in carrying out their own due diligence by monitoring the conversations, seeking answers to your own queries from the crowd and following the on-going fundraising process. The Crowd for Angels discussion board available on each pitch page is a useful tool.
You can contact the company simply by going to the company’s discussion board on the pitch and ask your question. You might be able to find answers to some of your questions already posted on the same discussion board.
Each company sets its minimum funding target and maximum funding target. When a company reaches its minimum funding target, it can collect the funds raised. However, if it fails to reach this funding target, the committed funds will be returned to the investors' Crowd for Angels accounts. Companies also set the maximum funding targets so that they can raise more funds to expand their business more quickly. However, companies are required to justify the use of the funds as set out in the maximum funding target. If an investor at Crowd for Angels would like to see a company succeed, it is preferable to invest in the minimum funding target.
Directors of private companies will have to indicate how they intend to realise your investments.
Regarding equity funding this will to a large extent determine the length of time you will need to hold your shares. In any event, to take advantage of the SEIS/EIS tax relief you will need to hold your shares for about three years.
With regards to debt funding companies issue loan notes which have a defined interest rate payable on the repayment date. Depending on the loan type you will have different options when it comes to realising your investments. Many of our loans are designed to have less than two years with interest payments. Concerning convertible loan notes you have the opportunity to convert these into shares and eventually sell these, however, this is not compulsory. With no conversion you can instead receive the principal sum plus the accrued interest upon the repayment date i.e. upon maturity.
Investments in private companies
Once the fundraising process is complete and the legal paperwork prepared, your shares will be sent to your nominee. The nominee will manage your investments on your behalf while you can still receive the full economic interest in the business. In case the company is sold or listed on a stock exchange, we will distribute all the financial benefits of these transactions.
Investments in public companies
The investment amount you invested in will start accruing interest once the legal paperwork has been completed. With regards to convertible loan notes the term is 360 days and investors at Crowd for Angels will receive a payment constituting their principal sum and interest. As an investor at Crowd for Angels you will have the option to convert your investment into shares if you wish to do so. There will be two dates at which you can convert the invested amount (or only part of it) and the conversion price will be made available to you on the close of business on this day.
If the company you invested in is taken over by another company, we will deposit the proceeds from the sale of your shares in to your Crowd for Angels account.
Our general recommendation to investors at Crowd for Angels would be to spread your investments between a number of companies. Investing in companies carries a lot of risks as many of these, historically, fail and therefore, diversifying your investments will be an essential prerequisite in benefiting from such investments. Nevertheless, it is important to note that we do not advise investors at Crowd for Angels on how much they should invest and nor in which companies.
Some companies give not only shares or loan notes in return for investments but also rewards. The nature of these rewards is determined by the company. Normally, there are thresholds set in respect of the amount to be invested to receive a specific reward. For more information about rewards, please look at the company’s pitch on the right-hand side (just below the info panel). Please note that it is entirely up to the company whether it wishes to give rewards or not.
Yes. All you do is go to the 'my pitches tab' and click on the 'start a pitch' button. You can then choose between starting an equity pitch or a debt pitch.
The convertible loan note prescribes conversion dates which the company can decide for itself. If you choose to convert these loan notes into shares, you must submit a “Notice of Intention to Convert” via the means made available on the Crowd for Angels platform. This will serve as an express instruction on the nominee to serve a conversion notice on the company who will then issue the shares. It is important to note that converting your convertible loan notes in to shares is not mandatory. You can keep these loan notes until the repayment date which is 360 days from issue and have your interest and principal sum repaid in full.
The process is simple. A button called 'convert' will appear on your portfolio page on the conversion date. By clicking this button a form called 'Notice of Intention to Convert' will appear which you are required to fill in if you wish to convert your convertible loan notes in to shares. All you have to do is choose how much you would like to convert and click the button to calculate it. The calculations will show the following:
The amount of accrued interest on your convertible loan note
The conversion price
The number of shares you will receive upon choosing to convert
The residue cash balance, if any
If you decide to proceed, please read the 'terms of conversion' and if you agree, tick the box to show your agreement. You then click the 'submit' button. Once the 'Notice of Intention to Convert' is submitted, it will be sent to the nominee who in turn will send a conversion notice to the company who will issue the shares and send them to your nominated brokerage account. Therefore, please remember to fill in the details of your nominated brokerage account.
After you submit your 'Notice of Intention to Convert', we will send it to the nominee who will in turn serve a conversion notice on the company, who will then issue the shares to your nominated brokerage account.
If you decide not to convert, the company is required to repay to you the principal sum and accrued interest on the repayment date. The principal sum and accrued interest will be transferred to your Crowd for Angels account.
A convertible loan, is a loan with the ability to convert loan notes into shares at two points within the loan term. For an example of how this works on the Crowd for Angels platform please watch the video below. You can find more information about convertible loans on our dedicated page here.