The programme provides long-term affordable capital to help community organisations impacted by Covid-19 to build resilience and grow. This blend of debt, grant and donation or reward-based funding is new to the market and could be transformative for these organisations, especially those that have struggled in the pandemic.
However, the first pilot FC Clacton didn’t reach its target investment of £400,000, therefore we closed the offer and returned the money pledged to investors. This is the first time we have had to do so, and we’re keen to learn more about why it didn’t appeal to some of our investors, in order to take any learnings on board for future pilots.
The programme’s purpose is to provide funding to community-led organisations that otherwise can’t access the finance they need, as the debt generally available is too short-term and expensive.
We believe making more affordable capital available is an important response to the pressures that community-led organisations are currently facing across the country. We also know that many of our platform users support this approach and innovation.
In our January 2021 customer survey, we gauged what interest there might be in investing in community-owned businesses with a rate of return of 2-3% per year over 10 years or more. The response was positive with 29% of survey respondents saying they would invest on these terms and 23% of survey respondents saying they would be interested in investing in community owned business and to see these offers on the platform.
Why the programme offers are different and what this means
It has always been our expectation that investors will look at this programme of community-led offers differently from our other investment offers. This approach looks to harness the “power of the crowd” and as a pivotal way of enabling communities to rebuild post Covid-19. We envisaged this would be achieved by lots of individual investors investing smaller amounts than usual, due to the higher inherent risk profile.
Any relevant organisations for the programme are likely to be quite small and provide a service or facilities for local residents. These might include community-owned pubs, theatres, sports clubs, shops, community centres and renewable energy assets. Repayment of debt will usually come from revenue generated by members of the community supporting and using the services or facilities provided.
What all organisations will have in common is the emphasis on promoting positive environmental and/or social change by helping to promote equality, reducing isolation, encouraging health and wellbeing and to build social interactions.
We’ve learned a lot from the pilot already, although with such a new programme we’re keen to test and develop it, so further feedback is invaluable. It’s key for us to establish why more of our investors didn’t opt to invest in FC Clacton. It could be because it was sports-related and other community-led businesses would be more appealing, or it could be that the bond offer terms weren’t attractive enough or it may be that it wasn’t clear how impactful the investment would be.
We hope that with a different approach to these offers – smaller amounts invested by a larger number of invest of backers – we will fill these investment offers.
Therefore, if you invested in Clacton FC or if you didn’t, we would find it extremely useful to hear your views. Please click here for our very short survey of five questions which will only take a couple of minutes to complete. Thank you in advance.