Crowdcube is one of the leading British-based investment crowdfunding platforms. Since being founded in 2010, the platform has helped 312 companies successfully raise over £112 million from over 215K registered investors.
“We want to give entrepreneurs the opportunity to take control of raising funding from their own network of friends, family, customers and strangers,” says their about page, “We also want to give people the opportunity to become an armchair Dragon and build their own investment portfolio supporting new British businesses.”
If Crowdcube sounds like the right platform for your next equity crowdfunding campaign or investment, stick around to learn more about how the platform works for investors and businesses, stats on funded equity businesses in the UK and what other people are saying about the platform:
Investing
Crowdcube lets anyone invest in British businesses along with established investors and VCs for as little as £10. On Crowdcube, you can easily invest in a variety of businesses to diversify your portfolio and you can choose from three different ways to invest:
Equity – These offerings are typically made by startup, early stage and growth businesses. They are high risk, high reward long term investments that start from £10.
Venture Fund – Investments of this type are selected by a professional investment committee. They are also high risk, high reward long term investments. Investing with a venture fund allows you to easily build a portfolio of up to 10 businesses, with investments starting at £2,500.
Mini-Bond – A mini-bond gives you steady fixed income of up to 8% interest. These deals, with minimum investments of £500, are offered mostly by larger businesses and still involve risk.
On Crowdcube, 55% of investments are made by investors within one month of joining and the average return per annum for investors on the platform is 7.3%. About 65% of investments each month are made by existing investors, which suggests that people who try the platform often return to invest more.
Raising
What makes Crowdcube such a great equity crowdfunding platform for British businesses? The platform allows the public to invest in British businesses, giving startups and mid-sized companies easier access to the funding they need to grow:
“The UK Government-backed London Co-Investment Fund (LCIF) is investing in London’s finest seed-stage technology, digital and science businesses through Crowdcube,” the website states.
Like most crowdfunding platforms, there are no fees if your project is not successful. If it is, Crowdcube takes a 6.5% fee on the total funds processed. Other fees include administration fees (£1,250 to cover EIS/SEIS filing, communication with investors, etc.), fees for corporate services (£1,250 for the preparation of corporate resolutions, documentation, etc.) and payment processing fees (deducted by Stripe: 0.5% for UK, 1% for Europe, 2.9% for ROW).
There are two options for raising funds of Crowdcube:
Equity – These investments are made in exchange for equity so there are no interest repayments.
Mini-Bond – You receive the investment in exchange for regular interest payments (and a lump sum repaid at the end of the term). These are usually taken on by more established brands, who can raise £500,000 and up on Crowdcube.
The top 5 most popular sectors on Crowdcube are Technology, Food and Drink, Professional and Business Services, Internet Business and Retail. The top 2 most popular sectors for mini-bonds are Food and Drink and Education.
The top 5 most common regions are London, South West, West Midlands, South East and North West. Top 3 regions by amount invested are Greater London, South East and West Midlands.
On average, Crowdcube campaigns attract 169 investors per pitch and the average investment size (per investor) on the platform is £1890.71. In the last year, Crowdcube projects had a 52% success rate. Startups using the platform currently offer an average of 15.2% equity, early stage businesses offer around 14% and growth companies offer an average of 11.3% equity.
Conclusion
Although some have had their doubts about Crowdcube, the company has recently reached some milestones (including £100 million in funding as of September 2015) that have helped solidify its popularity.
“Once written off as a fad for startups that would never make any money, equity crowdfunding, which allows ‘armchair investors’ to buy small stakes in startups, now accounts for one fifth of all equity finance deals in the UK,” said one Management Today post in June 2015, “JustPark, the parking space finder app backed by BMW, raised a record £3.5m through Crowdcube back in March.”
