Crowdstacker Innovative Finance ISA

The Crowdstacker IFISA was one of the first few peer-to-peer ISAs ever launched, introduced shortly after the government’s own official launch of the IFISA in April 2016. The firm states that the ISA is now attracting £1 million per month in investments. If you’re considering investing in a Crowdstacker ISA, we’ve taken a closer look at it, and at the firm itself to give you a wider understanding of the particulars.

Crowdstacker overview

The London-based company was founded in 2014, and allows lenders the opportunity to invest in British businesses in an accessible format. Some facts on the company and its achievements are as follows:

Crowdstacker IFISA

The firm purports to offer you around 5 to 7 per cent of tax free interest through its ISA. The government currently allows you to invest up to £20,000. The only fee Crowdstacker charges is a £15 transfer fee should you wish to sell your loan to another party through the platform.

Security

The platform asserts that it takes “a bespoke approach to due diligence”, and does so by interrogating the financial health of a business. Such an interrogation includes credit-checking, management interviews and forensic accounts reviews. The firm adds:

“Our starting point is where some finish. As testament to this, only four companies out of over 30 businesses we have seen have cleared the high hurdle we set.” (as at August 2016).

As money lent is not protected under the Financial Services Compensation Scheme (FSCS), Crowdstacker has other safeguards in place. Types of security include a debenture over the borrower’s assets, or security over specific assets.

Additionally, before the loan commences, your money is held by a custodian in an FCA regulated UK bank, so if anything happened before commencement, any losses are covered by the FSCS.

Crowdstacker negotiates additional protections with businesses, and in many cases, acts as the security trustee, so that it can step in to protect you if necessary.

Automatic diversification

The premise of Crowdstacker is to present investors with a ‘stack’ of businesses who want to borrow. The investor then manually selects those they wish to lend to – and thus, there is a distinct lack of automatic diversification. Whilst the business does promote diversification as a form of risk mitigation, the decision to do so, and the extent at which to do so, lies fully in the hands of you, the investor.

Secondary market

Crowdstacker’s secondary market works as a match bargaining system, whereby the platform publishes the loan you wish to sell on its market, also approaching already interested members. There is however, no guarantee as to how quickly a loan can be sold, though the company’s website does state that it has been able to sell all published loans so far.

How to invest in Crowdstacker’s IFISA

Investing takes just a few minutes online and goes as follows:

Page 1 – Enter your email address and choose a password

Page 2 – Provide your name, date and country of birth, address, confirmation of whether or not you’re a US citizen, telephone number, bank details, conformation of where you’d like your interest paid into. There’s the option of receiving payment into your own bank account, or into your ISA account, whereby you’d then be able to reinvest

Page 3 – You come upon a series of questions confirming that you have understood the risks of lending through the Crowdstacker platform

Page 4 – Confirm that you adhere to Crowdstacker’s stipulations, and provide the relevant authorisations

Page 5 – Once you make payment, you can get selecting

There’s also the option to fill out a paper form instead of applying online.

Considering investing?

Crowdstacker is a contender for investors who wish to invest in small businesses, as opposed to loaning capital to the property market or to retail borrowers. The firm doesn’t list many businesses (three at the moment) but provides a well of information on them and the reassurance of a thorough due diligence process.

Originally Published: Tuesday, April 4th, 2017
Updated: Friday, November 30th, 2018

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