We offer direct investments that help build a better future for us all, as well as good financial returns
Business overview
| Location | London, United Kingdom |
|---|---|
| Social media | |
| Website | www.abundanceinvestment.com |
| Sectors | Finance & Payments Digital Mixed B2B/B2C |
| Company number | 07049166 |
| Incorporation date | 19 Oct 2009 |
Idea
Introduction
Abundance offers investments that create something good for the environment and society, and that deliver a good financial return. Our investors put their money directly into businesses building a better future that offer returns of 4-15% per annum (gross).
We have broken the mould from the start. We became the UK’s first regulated crowdfunding company in 2011. We launched our first investment in 2012, allowing anyone over 18 to invest in renewable energy projects from as little as £5 for the first time. Since then we have funded 34 investments, making a real difference in energy, social housing, and recycling technologies, raising over £75 million in the process.
Abundance is helping build a more democratic and open financial system that gives people control over their money and how it's invested. We want everyone to be able to take part in the transition to a better world and share in the financial benefits from doing so, be that through their investments, their ISA, or as a shareholder.
Intended impact
Abundance was founded on the principle of democratic finance, a term we coined to describe our belief that finance works better when it is open to all. We connect ordinary investors who want their money to be a force for good, with businesses and local government who need to raise money to fund projects.
At the time of our launch there was no easy way to access investments in the next generation of infrastructure that will power our future. Millions of UK customers wanted to access investments with green and social benefits but many people told us that the minimum investment was often far too high. Meanwhile, we were meeting with a range of businesses that wanted to build new infrastructure, but were constrained by a tightening of funds from mainstream banks and funds.
Our founders saw an opportunity and Abundance was born. We specialise in structuring and distributing direct investments that help investors meet their financial needs, while unlocking funding for businesses to finance the green and social infrastructure that the UK needs.
Substantial accomplishments to date
- Customers have invested more than £75 million on Abundance
- Loyal customer base - over 5,250 people investing on average 4.6 times
- 34 different investments successfully funded across energy, sustainability and social housing
- £12.1 million returned from their investments
- 5 star satisfaction rating on Trustpilot
- Abundance launched one of the first Innovative Finance ISAs; we now have more than 2,900 ISA customers
- We are a leading IF ISA provider; we have 8% of the Innovative Finance ISA market overall (as at April 2018)
Significant business milestones
- First wind investment launched in 2012, followed by a range of long term wind and solar investments
- Our first short term project, to build another wind turbine, went live in 2015 and broader energy investments followed in 2016
- 2018; first non-energy sector investment – a £4.25m social housing investment, the first of a pipeline of many
- Strong repeat business - many of our issuers have come back to raise funding with us again - most recently, Atlantis Resources, the global tidal power and diversified renewables pioneer, raised a total of £10 million in July 2017 and January 2018
Business performance
- 52% growth in investor numbers since the start of 2017
- Average customer portfolio size increased by 30% in the past year
- Marketing spend efficiency (sales / marketing costs) improved by 76% in the past three years
- Strong revenue growth £292k in 2014, £1,337k in 2017, 2018 YTD already £1,352k, and a scalable business model*
*source: unaudited management accounts
Monetisation strategy
Abundance has a very simple business model.
Where possible, we are a free to use service for our investors. Our general portfolio and ISA is fee free for investors, and the returns we state are the returns you can expect to receive. Abundance charges no fees for withdrawals or ISA transfers. Only the Abundance Pension levies a fee, to cover administrative costs from our third-party pension provider.
We make money by charging issuers for our services: bringing the crowd to their investment via an ISA eligible, regulated investment and administering that investment on their behalf over its life. This provides 2 income streams: an upfront setup fee on each investment we launch and, thereafter, an ongoing annual administration fee.
Use of proceeds
Having raised the first £75 million through our platform, this raise is about taking our growth to the next several hundred million. The proceeds from this raise will help us get there.
1. Expanding our investment team: so we can bring more of a wider range of investments to our investors. Our customers have shown their appetite for us to expand our range across new social sectors.
2. Increasing our investment in marketing, scaling up campaigns with a focus on our tried and tested channels to recruit more investors. This in turn enables us to fund bigger investments for a larger range of companies.
3. Investing in our technology: building things ourselves has served us well. The process of bringing our customers an easy to use and engaging investment experience never stops so we will expand our in-house technology team so they can continue to deliver a leading platform experience for all customers.
The company has £51,000 outstanding loans to directors. The loans do not carry any interest and have no fixed repayment date. None of the proceeds of investment are intended to be used to repay this.
Market
Target market
Abundance has 2 groups of customers: our primarily UK retail investors and our issuers.
TGI data, an industry standard, identifies 7 million altruistic or socially motivated investors among 32 million savers and investors in the UK and the launch of the Innovative Finance ISA in 2016, has given us access to the £608 billion ISA market. To date, we have 2,900 ISAs, and we are the main or only ISA investment provider for 20% of our customers. We have developed a detailed segmentation of our target market, which we use to target potential clients with socially motivated behaviours and is validated by the results of our marketing campaigns.
Amongst issuers, we work with a diverse range of organisations, from SMEs to AIM listed companies through to local councils. All of them go through our detailed due diligence process to ensure they meet the technical, financial and legal standards required so our investors can build diverse portfolios across a range of sectors, investment terms and risk levels.
Characteristics of target market
Caring about what your money does is no longer a marginal objective. The 7 million UK savers and investors who have a social motivation accounts for around a third of active investors, and it’s a growing market, up 5% in the past 2 years alone.
Our regular Great British Money Survey consistently shows that around 70% of the UK population want to see their money invested in things that both give a decent return and don’t harm the future. Abundance targets this audience by meeting the need to make a decent return towards financial goals and their desire to see their money put to socially positive use.
Socially motivated investors typically have existing investment portfolios or ISA accounts and they are more likely to be financially confident and they are active in making decisions about their money. We believe this makes them a good target audience to drive our business growth.
Marketing strategy
We are an established player in the UK investment market. Since 2014 we have been actively raising brand awareness with advertising and PR. We have developed and refined our advertising approach, improving our ability to effectively buy media to reach our target audience, and refining our messaging to increase engagement with them.
We use a range of online and offline marketing channels; balancing awareness and activation to ensure we improve overall brand awareness while also ensuring we meet our short term sales goals. Our media and messaging mix has delivered consistent improvements in our conversion performance even as we scale up our marketing campaigns, and we intend to continue building on these effective tactics in the future.
With each successful raise, potential issuers see the benefits of funding through the crowd, which helps pipeline, and when combined with an active presence in industry and government groups and at conferences, raises our profile in our target sectors.
Competition strategy
Abundance customers are typically active with their money, and use our platform as part of their broader investment or ISA portfolio. Because of the unique range of investments we offer, we find our customers tend to incorporate us into their existing plans, rather than viewing Abundance as an either/or choice with another platform. This means we're well placed to increase engagement with existing customers as we diversify our investment range in the future.
There are many mainstream providers of project finance – including banks, large infrastructure funds and other institutional investors – generally looking for projects in the tens and hundreds of millions. In due course, we may compete with them but the proposition of funding with the users of the infrastructure is something we believe none of them can provide.
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