Crowd for Angels launches convertible loan notes for listed companies
Crowd will be able to convert funding into shares at a discount on the future valuation
Debt and equity-based crowdfunding platform Crowd for Angels has announced that it offering investors the opportunity to invest in convertible loan notes in listed businesses, a new “first” for crowdfunding.
Popular with Silicon Valley businesses, convertible loan notes enable the crowd to convert their investment into equity at a later date, at specific rates or in response to particular events, at a discount on the future valuation; meaning investors receive more shares for their money than future investors.
Australian mining firm All Star Minerals, an ISDX-listed company, is the first to utilise the site’s new financing method and is looking to raise up to £250,000.
Its loan notes will run for a period of 540 days with a 12% discount on market price per 360 days. Investors will be able to convert their loans notes into equity after 360 or 540 days at a 10% discount on the future valuation.
Launched just two months ago, FCA-regulated Crowd for Angels provides funding for businesses from seed stage through to listed, and claims to provide benefits to both investors and companies by giving investors access to firms that would normally be reserved for institutional clients.
Its offer of convertible loan notes follows on the back of equity-based crowdfunding platform Seedrs’ recent launch of its convertible equity scheme.
Crowd for Angels director and founder, Tony De Nazareth, explained how the funding scheme works:
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“Investors have the choice of simply holding the loan notes until maturity to earn the interest and get repaid. They also have the option to convert their notes into shares of the company if they so wish.
“It is so much easier for potential investors to do their due diligence as listed companies tend to have much more reliable information about them than private companies.”