Flagstone, the UK’s biggest savings platform by number of clients, has reached its target fundraising through the Enterprise Investment Scheme (EIS). The online savings provider engaged Wealth Club, the UK’s largest broker of alternative investments to lead the EIS funding round.
The EIS launched on 19th January 2022 and was full within one month. The offer was extended into an overallotment and Wealth Club’s private investors invested £2.6 million into the growing business as part of a larger investment round. The fundraising closed on 25th February.
The UK government established the enterprise investment scheme in 1992, as an initiative aimed at encouraging private investors to support UK innovation, stimulate the growth of the economy and build employment opportunities. In return the EIS provides 30% tax relief for investors who are willing to invest in early-stage, high potential and higher-risk companies.
Launched in 2013 as a platform for high-net-worth savers, Flagstone aims to address the inertia that prevents savers from shopping around for better interest rates. It provides savers with a simple to use, secure online platform, with access to hundreds of deposit accounts from over 50 banks through a single application, empowering them to earn 5 to 10 times more interest, and reduce their risk under the FSCS scheme, which protects a maximum of £85,000 of savings with any one provider.
Flagstone’s vision is to create the UK’s biggest savings platform by assets. The money raised from the fundraise will be used to continue scaling up Flagstone within the UK, including enabling the further reduction of its entry threshold of £50,000 for new personal customers, adding other investment products to its service offering and also building on its ambitious plans to grow the business internationally.
Simon Merchant, CEO of Flagstone said, “We have enjoyed working with the highly professional Wealth Club team on this important fundraising. Their extensive network of high net worth and experienced investors means that we were able to present the opportunity to a large number of potential investors and clients. This funding round enables us to continue with the scale up of our business in the UK and internationally.”
Alex Davies, CEO and Founder of Wealth Club said: “An estimated two-thirds of all deposits held by individual savers and a further £500 billion of cash deposits held by SME businesses and charities is sitting static within the big high street banks earning very little interest. What most people don’t realise is that with inflation running at 5.5%, the value of their savings is silently being eroded. With interest rates creeping back up at the same time, this only presents another huge opportunity for Flagstone to grow its business as all focus returns to interest rates on savings.”
There are a large number of obvious synergies between Wealth Club and Flagstone. We are both serving the needs of wealthy individuals who are seeking to maximise their capital, albeit at either ends of the risk spectrum. It’s therefore no surprise that our clients were quick to snap up an investment into the Flagstone EIS. Flagstone has built up an enviable market position in the UK with well-developed distribution channels (including IFAs, wealth managers and other fintech partners) and a large number of top-tier banking partners. A significant investment in technology has enabled the company to reduce its minimum deposit amounts over time, opening up its market-leading service to a far wider audience.
We are incredibly excited to see what the future brings for this vastly expanding business and its investors – and with increasing inflation the real cost of doing nothing with your savings is rocketing which should position Flagstone well to deliver its ambition plan”
Key benefits for Flagstone clients:
• Access to exclusive and market-leading interest rates on the market, thus maximising investment returns.
• FSCS protection of £85k over savings in multiple UK-regulated banks (£170k for joint), if eligible – thus reducing risk in the event of bank failure.
• Easy and convenient management of funds: move, place or spread deposits 24/7 between banks with no additional applications to complete after the initial set up.
• Complete visibility of money through an intuitive dashboard, with consolidated interest and tax reporting.
• Execution only – meaning clients can choose the deposit products that suit their needs, rather than being part of a portfolio approach. Clients are charged an annual management fee of 0.15-0.25% depending on account size, and some are also charged an initial set-up/AML fee of £150-£500, depending on level of deposit.
