Hi-fi, Lo-fi, Alt-Fi

Written by Lisa Stanley Mann on 11th March 2016

Alternative finance, or Alt-Fi to those in the know, is an increasingly popular way for companies to raise much-needed growth finance while at the same time allowing investors to benefit from some relatively strong returns.

Mini bonds, Social Impact Bonds, charity bonds, peer-to-peer, crowdfunding, community shares and the like all make up an increasingly diverse and growing sector collectively known as alternative finance or innovative finance.

With the impending launch of the new Innovative Finance ISA we can expect even more interest in this new sector.

Given interest rates remain stuck in the doldrums and it looks likely this won’t change for a while, alt-fi investments can offer better-than-cash returns over a set time period. Notwithstanding usual risk warnings, of course!

We’ve rounded up 3 tempting offers below.

  1. Bristol-based independent retailer of organic, local, ethical and fair trade goods Better Food Company is looking to raise £350,000 through a bond issue offered by Triodos Corporate Finance. The funds will be used to open a new shop and café at Wapping Wharf, in the up and coming Harbourside area of Bristol, by May 2016.

Investors can earn 7% per year over the five year term of the bond and also benefit from a 10% store discount card. The minimum investment is £2,000 and the bonds are transferable but not listed on any investment exchange. The offer is due to close on 1 April and is available at www.betterfood.co.uk/bondoffer or by calling Triodos on 0117 980 9593.

2. London Community Land Trust (London CLT) is looking for investment to develop a scheme to build affordable housing for local families in Lewisham, London, as well as accelerate plans to develop 100 more homes at the Olympic Park site.

They are hoping to raise a minimum of £150,000 by way of withdrawable shares offered to investors for £1.00 per share, with a minimum investment of £100, or 100 shares. The share offer is due to close on 19 April and is available via www.ethex.org.uk/

3. Southill Community Energy (SCE) in David Cameron’s constituency of Charlbury, Oxfordshire, is offering investors the chance to buy shares to develop a solar farm. This is one of the last community share offers available for investment following government changes to the Feed-In-Tariff. SCE are hoping to raise £3m to complete the solar farm build.

The share offer aims to offer a return of 5% per year over the 25-year life of the 4.5MW solar farm. The minimum investment is £250. SCE will also look to return £750,000 to the local community by way of schemes to reduce fuel poverty, increase energy efficiency and reduce carbon emissions, as well as refurbish Charlbury Corner House. The share offer is due to close on 8 April and is available via www.ethex.org.uk/SCE.

4. There’s also the country’s first council solar bond for, would you believe it, Swindon of all places – see what we wrote about this a couple of weeks ago. It’s available on the Abundance platform.
And there are plenty more options, too. You could choose to become a lender to growing businesses via a P2P platform such as Seedrs, or to individuals via the likes of Zopa or Ratesetter.
Or, rather than a financial return, you could receive a different, rewards-based return on your money, by pledging via a rewards-based site such as Crowdfunder, and helping to finance a film, a national campaign, a piece of art, product development, a garden, or community projects perhaps. 
With a number of developments expected in the sector over the coming weeks, such as the launch of new investment platforms and the new Innovative Finance ISA, it’s clear that Alt-Fi is about to go Hi-Fi.