Since its launch, investors have committed almost £132 million to support entrepreneurs, developers and business owners via The Route – Finance’s Private Debt Platform.
Taken in isolation it’s an impressive figure. Those who invest via The Route – Finance’s platform are private individuals committing their own funds. Like all investors, they are accepting a degree of risk, and the fact that The Route has secured a commitment totalling £132 million indicates that the Private Debt Platform model represents an attractive option for High Net Worth individuals seeking a return on their capital.
Viewed from the borrower’s perspective, The Route – Finance exists to provide funding to business owners. To maintain that service at a level that secures the confidence of entrepreneurs and their advisers, the platform must demonstrate that it has access to sufficient and sustainable funding.
The fact that The Route has secured a commitment totalling £132 million indicates that the Private Debt Platform model represents an attractive option for High Net Worth individuals seeking a return on their capital.
A Growth Curve
And recent figures indicate that increasing amounts of capital are being made available through The Route. Wind the clock back to 2012, and at that stage just under £20 million had been committed by investors. That figure has grown significantly, particularly in 2017 and 2018, demonstrating the attractiveness of the Private Debt Platform not only as an alternative source of finance for businesses, but as an investment vehicle for High Net Worth individuals. Put simply, The Route’s sustained and increasing success in attracting capital means that more funds are available to entrepreneurs.
Doing Things Differently
The Route – Finance was launched in the early years of this decade – a time when P2P lending was beginning to revolutionise business funding in the wake of the financial crisis and the subsequent reduction in lending by banks.
But The Route set out to do things differently. Peer to Peer lending (P2P) platforms relied on large communities of retail investors who were prepared to lend to companies in order to achieve a better investment return than would have been available from, say, savings accounts. Institutions later joined the lender base.
In contrast, The Route – Finance’s Private Debt Platform is underpinned by a much smaller community of High Net Worth and sophisticated investors, that make up the membership of The Route – City wealth club.
The distinction between P2P and the Private Debt Platform model is an important one. For instance, one key feature of The Route’s approach is that investors commit capital in advance, rather than on a case-by-case basis. From the perspective of the borrower, this means that finance is available when required. Or to put it another way, the Private Debt Platform represents a more reliable source of funding.
A second key feature is the comprehensive and transparent due diligence process carried out by The Route. The advantage for borrowers is that The Route’s investors are more likely to give a green light for their money to be directed at a particular project when they trust the due diligence process. This in turn provides assurance to businesses. Once the due diligence process has been completed and a deal recommended to Members, there is considerable certainty about the cash that will be available.
Property and Real Estate
In recent times, The Route’s Private Debt Platform has proved particularly attractive to entrepreneurs working in the property and real estate sector.
And it’s a corner of the market that illustrates the flexibility of The Route’s offer. A property project might be as simple as the purchase of a house or block of flats for refurbishment, or a major development involving the demolition of existing buildings to make way for new ones. No two projects are the same.
To that end, The Route has developed a range of finance solutions, including: development finance, bridging finance (or a combination of the two) and if required, mezzanine finance. As things stand, the average loan size is circa £1.6m, with the repayment term averaging 10 months.
To date, 27 loans have been completed. Over the same period, there have not been any capital losses. Again, there is a virtuous circle here. As investors become increasingly comfortable with The Route’s model, the evidence suggests that more money is being committed, ensuring that entrepreneurs have access to capital when they need it.
The Private Debt Platform concept may be new or unfamiliar to business owners who see it as just another way to describe the P2P model. In reality, The Route – Finance’s approach has succeeded in attracting a distinct community of investors who are collectively channelling increased sums through the platform, ultimately providing a reliable funding option for entrepreneurs.
To find out more about The Route – Finance’s Private Debt Platform investment opportunities, or secured loans call 020 3141 9040