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Wirexapp Review

Based in London, Wirex is a digital money solution that combines cryptocurrencies and traditional personal finance services. The company aims to encourage the adoption of digital currencies by providing an easy to use and secure global platform. Dmitry Lazarichev and Pavel Matveev established Wirex at the tail end of 2014.

About Wirex

Since its inception, Wirex has had a transaction volume of $2 billion and 1.8 million users. The company headquarters are in London with additional offices in Kiev and Tokyo. Wirex is available in 130 different countries except for the United States of America.

The main aim of Wirex is for everyone around the world to have the ability to access banking services easily via internet access. The solution its fronting has no paperwork included and the company doesn’t take off days nor close for business.

The other goal for Wirex is to eliminate geographical limitations within finance. According to Wirex, everyone should be able to send and receive money to anyone anywhere within seconds.

Wirex Features

Wirex is both an application and an account that allows you to control your digital assets as well as traditional financial assets. Wirex began life as a provider of virtual cards before expanding to its current services. The company provides a personal banking solution that combines traditional banking and cryptocurrencies.

The cloud-based personal banking offers debit cards, mobile banking, and remittances. You can transact GBP, USD, and EUR through debit and credit cards. Buy, store, send, spend and convert Bitcoin and fiat currencies.

Wirex card provides both buying and selling of Bitcoins by accepting transfer via bank linking accounts. The card offers many blockchain opportunities which translate to cheaper and hassle-free services.

Wirex Visa Payment Card

The contactless Visa card allows you to make payments using your Wirex account. Thanks to the card, you can spend your cryptocurrency the same way as any fiat currency. Wirex markets its visa card as the only Visa in the world that allows you to convert crypto into fiat currency.

Currency Accounts

Wirex currency accounts work the same way as a regular bank account, with a sort code and designated account number. Make and receive deposits and use the linked debit card for regular payments. You can use the service with several clicks thanks to integrated technologies for global payments and peer-to-peer transfers. Manage your account via the free app (available for iOS and Android) or on the desktop.

Cryptocurrency Wallets

Enjoy secure wallets for Bitcoin, Litecoin, XRP and WAVES with support from online and mobile applications. Users can choose from one of six different currency wallets. The secure wallets have cold storage features for cryptocurrency, multi-sig functionality, and traditional currencies.

Bitcoin Exchange

To buy Bitcoin via Wirex, you’ll need to fund your account via credit card, bank transfer, PayPal, altcoins or using other payment methods. Converting your balance into Bitcoin is free. The fully integrated platform allows you to spend your Bitcoin using the payment card as everything is in one place.

Pros

  • Quick verification
  • Has a UK FCA e-money license
  • Contactless Visa Debit cards
  • Browser-based and mobile apps
  • Crypto-friendly business accounts

Cons

  • Maintenance fee of £1 per month
  • Wirex cards are not accepted everywhere
  • Can buy and sell cryptocurrencies cheaper elsewhere
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NEO Finance Peer-To-Peer Lending Platform

The largest peer-to-peer lending platform in Lithuania is NEO Finance. Established in 2015, the platform has consistently increased its granted loans and currently has over 7,800 active investors. As a loan originator, NEO Finance is not a marketplace like Fast Invest, Mintos, or PeerBerry. NEO Finance users have more control of the platform, and there’s more insight into the identities of borrowers. This allows lenders to be more specific on whom to lend.

How it Works

You can apply for a loan on the NEO Finance platform which then does a credit risk evaluation, sets interest rates and searches for lenders to fund the loan. Investing in consumer loans is as little as €10. The average loan amount on the platform is €2,700 and the average loan term is 49 months.

Having an unlimited e-money institution license allows NEO Finance to operate anywhere in the EU. The platform is similar to a banking system where user accounts have their own International Bank Account Number (IBAN) number. Instead of sending money to NEO Finance, you send to a Lithuanian bank account under your user name. This setup gives your investment an extra safety feature.

Regulation and Licenses

Apart from its rapid financial progress, NEO Finance is also at the forefront when it comes to regulation. Other NEO Finance credentials include:

  • Supervised by the Bank of Lithuania
  • The Electronic Money Institution (EMI) license from the Bank of Lithuania
  • Is in the public list of consumer credit providers
  • Is in the public list of P2P lending platform operators

NEO Finance Investment Opportunities

NEO Finance provides consumer loans of up to €15,000. Interest rates are based on the level of investor demand and risk factor. Smaller loans have less stringent payment conditions with lower default rates. Both the loans and borrowers are categorized into three types: A, B, and C. Category C borrowers have higher interest rates as they’re riskier. The interest rate and risk factor are lower for Category A borrowers. The investor can also view different data fields concerning borrowing including assets owned, income, previous debts repaid, other liabilities, and credit score.

Buyback Guarantee

The platform offers a buyback guarantee on their loans, though it’s different from other platforms. The buyback guarantee covers 50 to 80 percent of the face value in case of loan default. But this depends on the credit score of the borrower.

Provision Fund

Same as buyback guarantee, provision fund fully covers you in case the borrower defaults on their loan. But its use is not mandatory. The Provision Fund is akin to having insurance, whereby NEO Finance buys back defaulted loans using their assets as collateral for the repurchased loans

Is NEO Finance Safe?

Authorisation and licenses from several authorities including the EMI license make NEO Finance safe. Furthermore, outstanding loans and the default rate is low, and the company has the potential to recover money from defaulters.

The NEO Finance platform ticks the correct buttons for a robust P2P lending platform. A look at the company’s annual reports offers encouraging signs to potential investors. Though yet to be profitable, NEO Finance has more cash and equivalents than what is necessary for provisions. If you’re looking for a secure platform with a high return for investors, then you should consider NEO Finance.

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ETHLend Review

Incorporated in Estonia, Aave (a Fintech Company) owns and operates ETHLend. Despite its registration in Estonia, the bulk of its operations are in Helsinki, Finland. Created as a decentralized peer-to-peer borrowing and lending platform for cryptocurrency, ETHLend aims to resolve loan defaults and save lenders from losses. It also allows cryptocurrency holders to gain value from their digital assets without having to sell their assets.

How Does ETHLend Work?

ETHLend uses the Ethereum blockchain to enable secure lending with a P2P lending model. The borrower creates an Ethereum based smart contract using the data input such as loan amount, interest rate requested, and duration of the loan. The borrower also adds the address for the cryptocurrency and the amount to use as collateral.

The cryptocurrency put as collateral is transferred to the smart contract, availing the loan to lenders for funding. The collateral is transferred from the smart contract to the lender to cover the loan in case the borrower fails to repay the loan.

After receiving the tokens, the lender can choose to sell them on the open market or keep them. Because the whole process is via smart contract on the Ethereum blockchain, it’s secure. Even ETHLend cannot access the tokens held as collateral in the smart contract. This process creates a superior lending service that doesn’t require a middle-man making it less expensive for borrowers and less risky for lenders.

You can borrow various cryptocurrencies on the ETHLend platform using ETH, BTC, LEND and 100 other ERC-20 tokens as collateral for loans. The required LTV is 50% or 55% when using LEND tokens. Most loans are backed to 200% collateral.

How to Use ETHLend

Apart from unlocking value by providing borrowers with liquidity and unlocking value from held cryptocurrency, you can use the platform to fund ICOs. You can even peg ETHLend to the USD or other fiat currencies to reduce volatility for lenders.

Benefits of ETHLend

Trustless lending platform – The platform prevents anyone from manipulating or changing loans and loan data. You get full transparency about borrowers and lenders. ETHLend is also a global platform that allows access to billions of unbanked world citizens.

Leverage digital assets – Get cash now for your digital assets and use the cash as your digital assets value appreciate. ETHLend allows you to access cash for investments, business startups or emergency cases.

Risks of ETHLend

Poor disclaimers and process – The ETHLend website throw users to the deep end of borrowing or lending without a clear guideline of how the platform operates, fees charged, and other important aspects of the loan process.

Arbitration process – If two parties disagree over something can ETHLend offer an impartial third-party to listen and resolve the dispute? As the platform continues to attract more users, such problems will crop up eventually.

The ETHLend system helps minimize risks to lenders while at the same time maximize benefits to borrowers. This is evident for users unlocking the liquidity of their digital assets. The platform also enables users to continue holding cryptocurrencies and enjoy price appreciation. This takes place while unlocking the current cash value to fund a business or participate in extra investments.

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Review Of EstateGuru Crowdfunding Platform

EstateGuru is a peer-to-peer lending platform based in Estonia that offers investors the opportunity to invest in real estate properties. Established in 2014, EstateGuru has already funded over 680 loans worth over €130 million. With a good lending track record, EstateGuru investors have achieved average returns of over 10% to date. The rapid growth has seen the company become one of the largest P2P investment platforms’ in Continental Europe.

How it Works

For starters, you need to be over 18 years old and have an account within the European Economic Area (EEA) or Switzerland. Note that investments in EstateGuru are only available in Euros hence the need to have a Euro account. If you reside outside Europe, you can open a borderless Tranferwise account and get a bank account in Euros.

There’re are two options when it comes to investing in EstateGuru real estate loans, Manual Invest or Auto Invest. Auto Invest is ideal for investors who use P2P lending as a passive form of investing. You can only invest in loans secured by a mortgage or by a personal guarantee from the borrower. To create an auto-invest profile, you’ll need a minimum of €50 in your account. You can set up your investment amount in a loan term interval, a single loan and the types of loans.

As there is no secondary market in EstateGuru, you can exit your investment when the loan-term ends or when the borrower pays off the loan.

Is Your Money Safe?

The real estate that the properties are tied to backs up all EstateGuru loans. In case the borrower defaults and is unable to repay loans, the property is liquidated and the remaining loans are repaid with the money received from the sale proceeds. In a good economy, such property loans investments are considered safe. Unlike other platforms such as Mintos, there’s no secondary market for loans. This means your money is locked in for the duration of your loan investment.

EstateGuru offers four main types of loans backed by property. They include:

  • Bridge Loan – Backed by the property, a bridge loan is a type of short-term loan. It takes 5 to 14 days to issue such loans, and they’re more expensive than traditional mortgages. Companies tend to choose a bridge loan when in need of quick cash. The repayment period of most bridge loans is between 1 to 18 months, and there’re no repayments until the end of the loan term.
  • Business Loan – EstateGuru business loans are for small businesses that need to increase their operating capital. The real estate property on the platform is the security and the interest rate is paid back on a monthly schedule.
  • Development Loan – Any loan used to develop a real estate property is a development loan. The repayment period ranges from 3 to 4 months.
  • Refinancing Loan – A refinancing loan is a loan made to pay off another loan. You can do this either to secure a better loan deal with lower payments, a lower interest rate, and a shorter loan term or to pay off a loan that is due at a specific date.

Combined with the low default rate, EstateGuru always has available loans to invest in. This means your money will not sit idle in the account due to lack of loans on the platform.

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How To Invest In Property With Brickowner

Founded in January 2017, Brickowner is a newcomer in the UK property crowdfunding market. As an aggregator, Brickowner can combine several investors investing smaller amounts, and pool a substantial amount to invest with an institutional asset manager. In simple terms, Brickowner gathers money from different investors and collaborating with established UK property asset managers, they use the funds to buy the physical property.

How Does Brickowner Work?

For every property Brickowner advertises on its website, there’s a set amount to raise which includes the acquisition cost and any other associated costs such as stamp duty and surveyors fees. After researching each property, the forecasted financials including rental yields estimates and projected returns for the 2 to 3 years it holds the property are given. This will allow you to gauge different properties against each other.

The beauty of crowdfunding is you can buy property without any bank help. Brickowner takes care of your investment once the property is fully funded. The company buys shares in the investment via a property manager and takes care of any investment maintenance including legal paperwork.

If you wish to exit the investment after the minimum period lapses, Brickowner will do it on your behalf. This function is ideal for investors with little understanding of property management. Another good thing about Brickowner is that you can sell your stake in a property before the investment period lapses.

Brickowner Fees

Brickowner charges two fees:

  • 3% Fundraising Fee – Fundraising fee is a one-off fee at the point of investment. It covers the use of Brickowner technology. The fee applies to investors buying newly listed properties as well as those that buy shares on the secondary market.
  • 1% annual management fee – This a monthly fee paid from the SPV.

Is it Safe to Invest in Brickowner?

In general, no crowdfunding investment is 100% safe. In Brickowner’s case, they give investors peace of mind by ring-fencing investments for added protection. The Financial Conduct Authority also regulates Brickowner.

By using Single Purpose Vehicle for each property purchase, you cannot lose your investment in case Brickowner goes bankrupt for whatever reason. This is because your investment is in the actual physical property and is separate from the website or other properties Brickowner has bought.

There’s further protection incase Brickowner were to go bust after raising funds but have not yet purchased a property. This is because investors’ money doesn’t go to Brickowner’s bank account but to a solicitor’s ‘ring-fenced’ account.

Pros

One of the main advantages of investing in Brickowner is that small investors get the opportunity to invest in big building projects with forecasted higher returns. Other benefits include:

  • Investments can start with as little as £100
  • Investments are ring-fenced in a separate UK limited company
  • The platform is easy to use for beginners
  • No exit fees when investment term ends
  • No rising interest rates associated with banks or building societies

Cons

  • Your cash is locked in a fixed term and no opportunity to resell your shares
  • Whether an investment is profitable or not, you have to pay the fees.

As the positives far outweigh the negatives, Brickowner seems like a decent platform to invest in. They offer a great option to diversify your investments once you join the bandwagon of property investors.

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Mintos Marketplace Review

Mintos is a Latvian P2P marketplace for investors that links different lending companies with investors and borrowers. According to AltFi Data, it currently leads the continental Europe marketplace with a 38% market share. Launched in 2015, the platform serves over 60 loan originators and more than 146,000 investors from 70 countries. Mintos offers an accessible and transparent option to the traditional banking system. In 2017, Mintos reached profitability with EUR 2.1 million in revenue and EUR 196,000 as net profit.

How it Works

Both retail and institutional investors can invest in fractions of loans from across various loan types and continents. Mintos connects loan originators to the marketplace and offers instant access to investors looking to buy loans

Opportunities for investment include personal unsecured loans, mortgage loans, invoices, secured car loans, and small business loans. Many of the marketplace loans are secured. This means the borrower has to attach an asset with their loan application. In case the borrower defaults, the loan originator can engage to sell the asset and redistribute the money to investors. This lowers any potential loss in case of a default.

Buyback Guarantee

Mintos buyback guarantee is usually with secured loans. This is a promise from the loan originator that they will intervene and refund you back the invested principal plus interest earned. This is inclusive of the 60 overdue days a borrower fails to make repayments. Though this method is not risk-free, it transfers the risk from the borrower to the loan originator.

Campaign Rewards

Mintos introduced campaign rewards in 2018. This allows you to get cashback when you invest in loans from a certain loan originator. In some cases, the loans may even be repurchased if the loan agreements change. In such a scenario, you’ll receive your invested principal plus earned interest which you can withdraw or invest in new cashback loans.

Mintos Auto-Invest

Auto-invest is a Minto tool that automatically completes your investment of choice strategy. Once you choose your investment criteria, Auto-invest will invest in suitable loans on your behalf. Auto-invest is accessible anytime and you can follow your portfolio activity in real-time. The tool is efficient as it saves time spent on investment matters. You can even access newly placed loans in the system before manually-made investments.

Auto-invest has three investment strategies

  • Primary market with a 14% interest rate and buyback guarantee within any duration.
  • Primary market which features a buyback guarantee, 13% interest rate, and a 12 months duration.
  • Secondary market which features loans with buyback guarantee, 14% interest rate and a 60 months duration.

As a new originator, you need to choose and fine-tune your strategy when there’re new campaigns or when interest rates change. Failure to adapt may lead to cash drag when no loans fit your benchmark. If you set your benchmark low, you can even miss on higher-interest loans.

The main advantage of Mintos is the variety of options to diversify your investments. But you must exercise caution as it could also be another fraud. This is partly due to the many loan originators and options making it difficult for new investors to choose the best investments. Despite some doubts, the generous buyback campaigns offer Mintos a trusted P2P platform with a long working history and various diversification options.

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What is Peer-to-Peer Network

The history of P2P and its eventual mainstream acceptance is thanks to Napster. In 1999, the file-sharing application made it possible to store music or film files across multiple computers.

The peer-to-peer architecture allowed millions of internet users to connect, and form groups. Users could then perform as user-created virtual supercomputers, file systems, and search engines,

What is Peer-to-Peer Network?

The idea of a P2P network is to create equal peer nodes that together serve as both “clients” and “servers” to other nodes on the network. Network participants then record and interchange information. The network model is different from the traditional client-server model where the exchange of information is to and from a central server. No central storage point eliminates the need for a dominant authority. This means no single individual can use the network to own or control it. If users secure it, they become the true owners of their data.

Peer-to-Peer Services

Some P2P services don’t involve a buy and sell transaction. However, they connect individuals to collaborate on joint projects, communicate and share information without intermediation.

When a third party is not involved in a transaction, there is an increased risk the provider may not deliver, the service may be of lower quality or the buyer may default. To mitigate such risks, transaction costs and prices are lower. This is done by creating businesses that facilitate P2P transactions.

Today, online merchants provide the lion’s share of P2P services. Popular examples include:

  • AirBnB – property owners can lease all or a section of their property to short-term tenants.
  • Open-source software – the software code can be modified or viewed by anyone.
  • Uber – riders and car owners have a shared platform that offers a uniform service for taxi rides.
  • Etsy – producers of homespun goods and other crafts can sell their goods directly to the public.
  • BitTorrent – the anonymous file-sharing platform allows users to meet and swap media and software files.
  • eBay – interested buyers can access a private marketplace with different private vendors.
  • Spotify – you can stream real-time audio content on-demand using P2P networking.

Peer to Peer Trading in Blockchain

Blockchain can reduce the inefficiencies in share settlement as peer confirmation settle shares. There’s no need for auditors to verify trades, a custodian to confirm the number of shares held or a clearinghouse. Eliminating the middleman from the back office means lower record-keeping costs, as well as lower trading costs on the platform.

Unlike the current settlement of three working days, peer confirmation of trades allows for almost instantaneous settlements. For this to happen, blockchain requires participants to already have the money and shares to exchange. Shares would be a more liquid investment and the higher liquidity will translate into more investment into your shares.

The evolution of the P2P network and its central role has seen it cut inefficiencies within blockchain technology. Blockchain has made the domineering third party irrelevant as users can deal with each other across a secure decentralized network. Although each peer participating in the network is open to viewing, blockchain conceals participants’ data through cryptography.

Peer 2 Peer Compliance

By nature Peer 2 Peer or otherwise known as P2P circumvents central governing bodies, such as banks in financial industry and allows people to send and receive money directly. This poses a number of issues for compliance from the money laundering perspective. The key one is how to prevent criminals from abusing P2P platforms and payment methods. As NorthRow writes in its Money Laundering and Compliance brief for the Peer-2-Peer industry:

“To protect customers, all regulated industries including banks, building societies, and credit unions are subjected to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. These regulations require these organisations to undertake appropriate risk-based customer due-diligence so as to ensure that the services offered by these financial institutions are not being used for money-laundering.” … “The FCA published new regulations for peer-2-peer loan-based and investment-based platforms following calls to better protect lenders/consumers in this industry.”

In 2016, the FCA began to review how this sector was regulated and, in 2018, consulted on changes. These changes come into force on 9th December 2019. For further information about Compliance and Money Laundering in the P2P industry read here.

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Assetz Capital P2P Lender

As the traditional banks continue to be less supportive in providing finance to many small and medium enterprises (SMEs), there’s increasing interest in peer-to-peer lenders willing to bridge the gap. Assetz Capital is one such P2P lender that we’ll review in this article.

Who is Assetz Capital?

Assetz Capital is the leading property-secured business P2P lender in the UK and Europe. They offer secured business loans to small and medium SMEs and are the second biggest general business P2P lender, behind Funding Circle. They offer loans to property developers and SMEs in the UK, funded by individuals and several institutional investors and companies.

Investment Accounts

Assetz Capital has a minimum investment amount of £1 and is open to international investors. However, you need a UK bank account and if you don’t have one, you can open it at Transferwise. There are no fees for investors and all Assetz Capital investment accounts are protected by a provision fund except the MLIA.

30 Days Access Account

For the most part, this account is hands off. You can deposit a small amount which should be credited in your account in less than two hours. The new 1% cashback offer on Assetz Capital 90-Day Access Account replaced the initial customer promotion. Investors who took advantage of this promotion will still receive their cashback payment.

Quick Access Account

The quick access account offers a 3.7% target rate, designed to provide immediate access to cash for investors in normal market conditions. There’s over £19 million invested in this account.

Other account types include the Green Energy Income Account (GEIA) with a 7% target rate, the Great British Business Account (GBBA) with a 7% target rate, and the Manual Loan Investment Account (MLIA) with 5.5% to 18% gross rate.

The Access Accounts are popular as over half of the investors utilise them and they’re approaching £170 million in investments. The lender has processed over £1 billion of withdrawals to-date from the Access Accounts.

Despite the underlying loans within the Access Accounts being between one month and five years in duration, the high investment flow into the accounts has allowed users to withdraw funds on time consistently. But supply and demand can vary while exit times are not guaranteed.

Whom Does Assetz Capital Lend To?

The lender comprises two divisions: Assetz SME Capital and Assetz Development Capital.

Assetz SME Capital provides secured loans to SMEs that have been trading for more than two years.

Assetz Development Capital provides secured lending to established property developers who have been trading for more than two years. Additionally, they offer “lend to let” secure loans to overseas clients wishing to invest in the buy to let property sector in the UK.

How Can You Use the Loan?

For Assetz SME Capital, loans are available to assist in business projects and future growth. For Assetz Development Capital, the preference is to lend for prime property purchases in prime locations. In the case for “lend to let” scheme, funds are availed towards buying quality buy to let properties.

With a loss rate of 0.46%, Assetz Capital ticks the correct boxes for a safe investment in the peer-to-peer lending for first-time investors. However, some Assetz Capital reviews online are discussing how the platform is confusing and frustrating, with some investors unhappy with the returns and manual investment process involved in some of the products.

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Can Dozens Money App Rival Monzo And Other Similar Fin-tech App Services?

Dozens is not a bank. They offer access to savings and current accounts while making them profitable. For only £100, you can earn a 5% return on your savings. Launched in January 2019, over 2,100 Dozens cards have since been issued, with 100 cards a day being sent to the more than 3,000 people on the waiting list.

How Dozens Work

Dozens offer a current account that helps you grow your money, encourage saving and finally invest. It offers several financial services including:

1). Current account – Dozens is yet to have a full banking license, so it’s currently not a full UK account. But, it will have an account number and sort code.

2). Cash savings – This will enable you to set aside money regularly, according to the set rules you decide. You will not earn interest on the savings, but you can transfer them back to your main account anytime.

3). Investment bond product – Already listed on the NEX stock exchange, the bonds will be £100 each and earn a 5% annual interest paid monthly.

4). Investment account – Yet to be launched, Dozens will allow you to invest your money. The minimum buy-in will be £1,000, and same as any investment, there’re risks of losing some or all your money.

5). A card – Dozens is already issuing cards to people on the waiting list. The cards are MasterCard and a bright yellow in color.

6). Great App – There’re four sections to the Dozens app: spend, save, track and invest. Spend is the current account, save is the savings account, track is your budgeting and invest is for stocks and shares investments.

7). Spending report – This feature shows your spending according to location, category, and size.

8). Budgeting service – You can save automatically by setting your own rules. Occasionally, Dozens will encourage you with cash prizes.

The 5% Interest Bonds

This is one of Dozens best features. Such high rates often mean a risky investment but the money you deposit with Dozens isn’t invested anywhere. The bonds are held within stocks and shares which are put into a separate trustee-controlled account. As a result, Dozens cannot touch it, your tax-free returns will not vary and the capital isn’t at risk.

The bonds are not risk-free as Dozens issued the bonds on the NEX stock exchange as a way for raising money. If the worst should happen, the FSCS offers investment protection up to £50,000, if your investment company fails.

In a bid to reward investors with smaller saving pots, Dozens will weight smaller funds more favorably. Bonds will be allocated from the smaller bids, scaling up until it depletes the monthly availability. This means the lower the bid, the more likely you are to get the bonds.

Should you get Dozens?

Same with any new banking ventures, due diligence is advisable before making any sizable investments. For Dozens monetisation plans to be a reality, people need to save and invest before any monies can be realised. The 5% bond is competitive enough and the fee-free overseas spending is likely to attract frequent travelers. If you have a small savings pot, the app might give you enough flexibility to get started.

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Seedrs Review And What To Expect

It’s now easier to invest in startups thanks to a new online trading platform called Seedrs. The platform allows you to invest in new businesses in the seed stage, or that are yet to raise any cash. You can invest as low as £10 to a maximum of £150,000.

About Seedrs

Seedrs is a UK based crowdfunding platform launched in 2009. It assists new businesses or investment projects to raise funds from individual or institutional investors. 2018 is Seedrs best year yet with £195M invested on the platform and 186 successful pitches. It was also named the “Most Trusted” Global Equity platform in 2018.

How it Works

Startups can pitch to raise money offering investors an equity stake in the company. You can also call it equity crowdfunding or peer-to-peer (P2P) equity. The startup provides information about its product, plans, market dynamics, and achievements.

Apart from UK residents, Seedrs is open to international investors. Once you sign up, you can browse the pitches that are currently raising money. A pitch will remain open for 60 days but may close earlier if the startup achieves its goal early.

The equity share offered is stated. Say for example it’s 5%, and the startup wishes to raise say £50,000. To define the valuation the startup has applied, £700,000 will be the pre-money. So post-money, after the startup valuation is complete, will be £1M. The 5% equity share of the new investors represents 5% of £1M = £50,000. The valuation is based solely on what the startup deems appropriate. But if the startup aims higher than the investor demand, the funding will fail.

What Happens After the Funding?

As Seedrs acts as the nominee for the investors, it will complete all the paperwork with the startup. The nominee model means the startup only deals with Seedrs who represent all investors rather than deal directly with each one of them.

When funding a startup, investors don’t have to pay any upfront charges. But entrepreneurs have to pay a 7.5% charge once the startup achieves the cash target. Seedrs will charge the investor a fee of 7.5% on the profits the investor makes.

In return, Seedrs will manage your investment on your behalf. Although Seedrs may limit your voting rights in the startup’s AGM, you’ll receive quarterly updates on the startup’s progress.

Tax Advantages

The startup’s prospectus or pitch will highlight if the startup is eligible for EIS or SEIS. This can benefit British residents depending on individual circumstances and is subject to change. For more detailed advice, contact a qualified and certified tax advisor.

Seedrs Pros and cons

Pros

  • Strong track record with over £540M invested in startups
  • Large investment portfolios
  • Strong underwriting team
  • Regulated
  • Auto invest tool available

Cons

  • Investing in startups is risky and you can lose money as there’s no guarantee of returns.

Having provided assistance of over £500M for startups, Seedrs has managed to create a big database of investors. However, the company cannot make any investment recommendations for you. That will be your prerogative. Crowdfunding is not for the faint-hearted, but for sophisticated investors who are not afraid to take risks.