The new tool is different to existing services in the UK because of its objectivity, the value of the information it uses to calculate a rating, and the fact that it free to everyone, says Alex Heath (former CEO of Interactive Investor) and Modwenna Rees-Mogg (founder of AngelNews), who have launched the new tool.
Interest in crowdfunding has increased enormously and this growth is expected to continue which makes the launching of Crowdrating.co.uk timely. It is also a regulated service which means that the highest standards are applied to researching and preparing each rating. Investors can therefore rely on ratings that are both are credible and trustworthy, says Ms Rees-Mogg.
“As the only regulated crowdfunding ratings agency in the UK we are able to give advice to investors and to issuing companies, and can be very direct in what we say,” she says.
The FCA is concerned generally about the research bank for equity in the UK, both for private and institutional investors, says Mr Heath.
“The problem is particularly acute in the crowdfunding world, not least because it is such a new market.
“Starting a ratings agency very early on in the life of the industry means that we can all grow the market in an aligned fashion. We estimate that there are as many as 250,000 early stage investors in the UK with more than 200,000 registered on equity crowdfunding platforms alone, but until now they have largely been reliant on comments on campaigns from a few independent bloggers, social media and the questions asked by other investors on the bulletin boards attached to each campaign,” he says.
Investors usually have to rely on information provided by the issuing company typically via the crowdfunding platform. This means there is no independent validation or regulated comment by experienced analysts available to investors, says Ms Rees-Mogg.
“We know that the platforms themselves recognise that properly independent research is necessary for the market to mature successfully.
“Not only can this platform be utilised by the general public with an interest in crowdfunding, it will also benefit all types of private investors ranging from crowdfunding novices to angel investors, and the VCs that are increasingly active in the crowdfunding arena.
Interest from a wide range of investors
“We are already being approached by angels and VC’s who would like to obtain a rating as part of their due diligence on fundraising companies outside the Crowd. We hope that for investors who use Crowdrating.co.uk, we will become the ‘investor’s champion’ helping investors navigate their way around this noisy space to find sound investment opportunities.
How the ratings work
“In order to calculate a rating, the company applies a four-step assessment process: rapid semi-automated data compilation, systematic scoring using our checklist driven ratings engine, a thorough review by an experienced, authorised Director with additional input from relevant investors or sector specialists on our Advisory Panel, prior to a final review by our Compliance officer. The results are summarised and presented in a one-page factsheet that is friendly and easy to understand. With a rapid turnaround, the process is highly efficient and effective, enabling investors to make informed decisions.”