Crowdcube

Crowdcube is a British investment crowdfunding platform, established by Darren Westlake and Luke Lang in 2011.[1]

Crowdcube
Type of site
Crowdfunding Corporate finance Equity (finance)
Headquarters
Exeter
,
United Kingdom
Founder(s)Darren Westlake and Luke Lang
IndustryFinance
URLcrowdcube.com
CommercialYes
LaunchedFebruary 2011

Model

Equity based crowdfunding is a new fundraising model for entrepreneurs. Individuals' investments are pooled, allowing entrepreneurs to secure funding directly from the general public and bypass business angels and banks.[2] The key principle of this model is that anyone can invest money in return for equity in a business. Entrepreneurs, with a UK registered company, can present their business and its investment potential to potential micro-investors by uploading a Dragons' Den style video pitch, images, and supporting documents. The minimum investment can be as little as £10.

Crowdcube operates on the "all or nothing" model. When a pitch reaches its investment target, the business receives the funding raised. If it doesn't, no funds are taken from investors. A commission is charged on successful funding campaigns.

The platform uses social media to a large extent to alert potential investors about an offering. In March 2015, the Financial Conduct Authority released new guidance on the use of social media to promote financial products to ensure that all communications are clear, fair and not misleading.[3]

Crowdfunding as a model for fundraising has become more popular over the past few years with the rise of the US-based Kickstarter and Indiegogo. These platforms differ from Crowdcube as they work on a donation and reward-based model where the donor receives a tangible object such as a DVD or piece of artwork in return for their donation.[4]

On 12 November 2018, Crowdcube introduced a new investor fee that charges investors for investing on the platform, 1.5% of the total investment, added on when the investment is collected. This fee is capped at £250.[5] The fee was met with some backlash within the Crowdcube community, particularly as it was introduced just before Crowdcube's own raise went live and pre arranged venture capitalists (the biggest investors) were exempt. It was also criticised for posting the news of the fees within the FAQs, rather than emailing all the investors.[6][7]

Regulation

In February 2013, Crowdcube received authorisation from the Financial Conduct Authority (FCA) to offer investors the opportunity to become direct legal shareholders in UK businesses.[8]

Successful exits

In July 2015, E-Car Club, an electric vehicle rental business championing the future of the green sharing economy, produced the first exit from the CrowdCube 'Funded Club'.[9] E-Car received a significant investment from Europcar, Europe's largest vehicle rental business.[10] E-Car club has joined the newly formed Europcar Labs project, which has been set up by CEO Philippe Germond to focus on 'mobility solutions'.[11] This is Europcar's first acquisition since its IPO on the Euronext in early June 2015.[12] 63 original investors in E-Car Club via Crowdcube benefited from a multiple return on their investment.

In December 2015, it was announced that Camden Town Brewery was being bought by the world's largest brewer, Anheuser-Busch InBev. In a letter to Crowdcube shareholders, AB InBev were offering a payout of between £1.0861 and £1.2526 per share,[13] depending on whether they accept an option with a variable element based on sales growth to be paid at a later date. Reports said this was a nominal return on investment of just under 70%, implying that AB InBev paid around £85 million.[14]

Funded campaigns

Equity

Some examples of companies that have acquired funding using this method are:

BusinessAmount RaisedNo. of InvestorsEquity ReleasedDate
Sliabh Liag Distillers £2,265,910 1,158 13.61% September 2020[15]
Imagen Therapeutics £1,036,436 668 8.94% July 2020[16]
Freetrade £7,015,011 5,981 4.63% May 2020[17]
B-North £2,135,456 523 13.03% January 2020[18]
Belluscura £538,140 302 9.6% April 2019[19]
Monzo £20,000,000 36,006 2.04% December 2018[20]
Recruitive £1,170,000 381 54.64% March 2018[21]
Manigo £510,630 355 14.33% January 2018[22]
Parcel2Go £1,057,730 1,308 2.58% November 2017[23]
Kar-go £321,720 281 15.11% July 2017[24]
Revolut£1,007,0504332.39%September 2016[25]
Movem£200,00011620%September 2016[26]
Chilango£3,433,0101,3008.72%December 2015[27]
Adzuna£2,149,3555525.89%June 2015[28]
JustPark£3,700,0002,91915.61%March 2015[29]
Open Desk£310,01017118.59%June 2014[30]
SilkFred£145,6107124.27%2014[31]
LOVESPACE£1,574,59025928.17%May 2014[32]
Crowdfunder£500,000-10%April 2014[33]
Zero Carbon Foods£659,48045429.04%March 2014[34]
Hab Housing£1,972,15064226.29%September 2014[35]
E-Car Club£100,0006320%December 2012[36]

Bonds

Bonds allow members of the public to lend money to the issuing company in return for interest and / or rewards. Mini-bonds have "particular appeal for established businesses".[37]

In June 2014 Chilango launched Crowdcube's first ever mini-bond campaign. Since then a number of other businesses have launched mini-bond offerings via the Crowdcube platform. Some of the businesses that have funded bonds via Crowdcube include:

CompanyAmount RaisedNo. of InvestorsInterest paidDate
Brew Dog£2,312,0008156.5%Oct 2015[38]
Taylor St Baristas£1,805,0004938%Jan 2015[39]
Eden Project£1,500,0003556%October 2014[40]
River Cottage£1,000,0002857%June 2014[41]
Chilango£2,035,0003478%June 2014[42]

Events

Caterham F1

In November 2014, Crowdcube partnered with Caterham F1 to raise £2.35 million to get the team to the final Grand Prix of the season in Abu Dhabi.[43] Designed to empower F1 fans to help Caterham return to race, the project successfully completed on 14 November,[44] with Caterham F1 finishing in 17th place with Grand Prix newcomer Will Stevens.[45] Caterham F1 went bankrupt in 2015.[46]

See also

References
  1. "Crowdcube | Nesta". www.nesta.org.uk. Retrieved 16 October 2017.
  2. "On the side of Angels - New ways of lending to small businesses". The Economist. 25 February 2012. Retrieved 4 July 2012.
  3. Norman, Tessa. "FCA social media rules create retweets 'minefield'" Money Marketing, March 2015.
  4. "Capital crowdfunders help you beat smart elite". The Metro. 3 April 2012. Retrieved 12 July 2012.
  5. "What are the fees for investing on the platform?". Help Centre.
  6. "Join and Start Investing Today". Crowdcube. Retrieved 23 March 2020.
  7. "Join and Start Investing Today". Crowdcube. Retrieved 23 March 2020.
  8. "British regulator okays start-up investment website for public". Reuters. 4 February 2013.
  9. Avi Geller. "Europcar's acquisition of E-Car Club 'world's first successful crowdfunding exit'". Growthbusiness.co.uk. Retrieved 21 April 2016.
  10. "The Europcar Lab takes majority stake in E-Car Club" (PDF). E-carclub.org. Archived from the original (PDF) on 4 March 2016. Retrieved 21 April 2016.
  11. Andy Sharman in London (15 June 2015). "Europcar plans Paris IPO to fund push into 'mobility solutions'". Financial Times. Retrieved 21 April 2016.
  12. "Resounding success of Europcar's listing on". Euronext.com. 26 June 2015. Retrieved 21 April 2016.
  13. "Here's Camden Town Brewery's letter to shareholders about the AB InBev takeover". FT Alphaville. 21 December 2015. Retrieved 22 December 2015.
  14. Davies, Rob (21 December 2015). "Camden Town Brewery sold to world's biggest drinks company". The Guardian. Retrieved 22 December 2015.
  15. "Sliabh Liag Distillers". Crowdcube. Retrieved 27 October 2020.
  16. "B-North". Crowdcube. Retrieved 18 July 2020.
  17. "Freetrade". Crowdcube. Retrieved 30 May 2020.
  18. "B-North". Crowdcube. Retrieved 23 February 2020.
  19. "Belluscura plc". Crowdcube. Retrieved 10 February 2020.
  20. "MONZO HAS RAISED £20M IN LATEST FUNDING ROUND". Crowdcube. Archived from the original on 11 April 2019. Retrieved 11 April 2019.
  21. "Recruitive Software". Crowdcube. Retrieved 18 May 2020.
  22. "Manigo Services Ltd". Crowdcube. Retrieved 3 October 2018.
  23. "Parcel2go.com". Crowdcube. Retrieved 3 October 2018.
  24. "Academy of Robotics raising £300,000 investment on Crowdcube. Capital at Risk". Crowdcube. Retrieved 6 June 2016.
  25. "Meet the UK equity crowdfunding success stories of 2016". startups.co.uk. Retrieved 7 October 2018.
  26. "Forbes - Why start ups are ignoring the risks" Forbes, September 2016.
  27. "Chilango Closes Funding on Crowdcube at £3.4 Million. Will Open 50 New Locations" Crowdfund Insider, December 2015.
  28. "Job search site Adzuna Raises 1.5m via Crowdcube to get Britain Working" Business Matters News, June 2015.
  29. "JustPark becomes UK's largest equity crowdfunded start-up" Archived 10 March 2017 at the Wayback Machine TechCity News, March 2015.
  30. "OpenDesk raise £150,000 in 12 hours" Archived 3 April 2015 at the Wayback Machine Westminster Impact Hub, June 2014.
  31. "SilkFred Ltd raised £120,000 investment - Oct 2013". Crowdcube.
  32. "LoveSpace hits £1.6m as Shazam Venture Capital firm adds £250,000 to funding pot" Archived 2 April 2015 at the Wayback Machine UK Business Angel Association, May 2014.
  33. "Reward-based crowdfunding platform secures £500,000 target in just over three hours" Startups, April 2014.
  34. "Growing under the Tube: 141% Funding for Zero Carbon Food’s Crowdcube Campaign" Crowdfund Insider, March 2014.
  35. "Kevin McCloud is a hit with the Crowd(cube)" Management Today, September 2013
  36. "E-Car Club Ltd". Crowdcube. Retrieved 7 October 2018.
  37. Bridge. Rachel, "Soapbox: Established businesses should consider using crowdfunding too, says Adam Blaskey" Telegraph, December 2014.
  38. "BrewDog Bond raising investment on Crowdcube. Capital at Risk". Crowdcube.com. Retrieved 21 April 2016.
  39. "Niche coffee house chain Taylor St Baristas secures £1.8m Crowdcube mini-bond" Startups, Feb 2015.
  40. "Eden Project crowdfunding raises £1.5m in 20 hours" BBC News, October 2014.
  41. "Fearnley-Whittingstall's River Cottage raises £1m through mini bonds" Real Business, June 2014.
  42. "Will Chilango's £2m Success Herald An Affordable Mini Bond Revolution?" Forbes, June 2014.
  43. Wise, Mike. "Caterham launch crowdfunding project to fund team's return for the Abu Dhabi GP | F1 News". Skysports.com. Retrieved 21 April 2016.
  44. Strickland, Jamie (14 November 2014). "Caterham to race in Abu Dhabi finale after fundraising success". BBC Sport. Retrieved 21 April 2016.
  45. "Past Results - Abu Dhabi Grand Prix". Skysports.com. Retrieved 21 April 2016.
  46. "Caterham hopes fade as team's remaining assets go up for sale". BBC. Retrieved 13 April 2016.
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