Syndicate Room is an online investment platform which has been recently awarded Best Investment Platform and Industry Game-Changer at this year’s Growth Investor awards.
The Cambridge-based venture, which is also based in Lisbon and partnered earlier this year with the London Stock Exchange to play a role in initial public offerings, therefore expanding its role from equity crowdfunding to professional online investing, have recently launched THE WATCHLIST to address the equity gap that exists for UK small-cap companies.
Oliver* met up with Tom Britton, Syndicate Room’s Co-founder and CTO, to discuss about current challenges and future scenarios.
OLIVER*: Hi Tom, thank you for joining us. First, I would like to ask you how the investment landscape is changing?
Tom Britton: The investment landscape is changing massively.
The old way of conducting most business behind closed doors and over handshakes between long acquainted partners is slowing fading out. The move to online investing has given retail investors far more access to asset classes they were once kept out and is slowly bringing a transparency to the industry that is much needed.
O*: How does the world of investing benefit from the quite young equity crowdfunding / altfi subset?
T: Equity Crowdfunding and the wider category of Alternative Finance are playing their part in the breaking down of barriers that kept retail investors out of certain asset classes. Additionally, these alternative forms of finance are providing much needed capital to early stage ventures that have been let down by the banks in the post 2008 world.
O*: From a portfolio management point of view, investors need to understand how companies they are investing in are performing. What is the state of the art in standardizing performance measurements?
T: The industry is only now making strides through standardizing performance measurements which is a bit of a shame. You are absolutely right about having to find this method which is transparent to both investors and companies. And, while there is buy-in from the platforms and the investors, I think you’ll find the bottleneck is getting the companies to agree to the standardized method and further, be willing to report more regularly.
O*: Emerging markets are putting a massive pressure on the British leadership in fintech and alternative finance while European cities like Frankfurt and Amsterdam are looking forward to strengthening their position in the market. From your point of view, how is Brexit going to change the market scenario for British online investment platforms like SyndicateRoom?
I’m being a bit optimistic about Britain remaining the centre of fintech in Europe post Article 50 being triggered and the separation taking place.
Fintech companies solve problems with the banking system, whether that’s transactional, recording, operational, security based, or other, fintech companies thrive on problem solving and fintech companies should view Brexit as just another problem they’ll need to solve. For SyndicateRoom specifically, there will always be investors who want to invest in promising young ventures, we just have to make sure these companies are on our platform.
O*: What future do you see for equity crowdfunding? What are the main trends and the main challenges?
The future of equity crowdfunding is globalization, bringing the most promising companies together with smart investors.
I see more companies focusing global expansion but I also see competitors rising up from around the globe which is one of the biggest challenges all platforms face.
I also believe these platforms will start to add more products to their offerings. P2P Lending, Equity Crowdfunding and Crowd Mortgages are just the beginning of what the platforms can offer. As more investors want to take their personal finance into their own hands, we’ll see these platforms offer more options for them to do that.
O*: What do you make of the latest FCA consultation that’s just been released?
I think the FCA is right to be generally concerned about the welfare of investors and they’ve gone about this exactly the right way, by getting feedback from those operating in the area.
I think they are still much more focused on the P2P Loans side of things as that is a much larger industry so I’m fairly certain they will come to comment more on Equity Crowdfunding platforms in the next consultation. I do, however, find it funny that members of the industry have asked the FCA to not look at blogs / commentators who might sensationalise the issues. If anything, I think more blogs and commentators are needed to poke holes in fund raises and act in many ways as a crowd watchdog for the industry. No individual investor can turn every stone, we need more people involved in the due diligence process and if there are bloggers, commentators, other investors willing to help great. In a way, they are the vigilantes of the industry.