Crowdcube

Team

Darren Westlake, co-founder and CEO has been named by Debrett’s as one of the UK’s Most Influential 500 People.

Luke Lang is the co-founder and CMO responsible for branding, media coverage and marketing communications.

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, bypassing business angels and banks.

The key principles of this model are that anyone can invest money in return for equity in a business. Entrepreneurs, with a UK registered company, can showcase their business, and its investment potential, to thousands of 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 does not, no funds are taken from investors. A commission is charged on successful funding campaigns.

The platform utilises 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.

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.

Industry

In that short space of time, investment crowdfunding is moving into the mainstream world of finance. NESTA (February, 2016) recently reported that equity based crowdfunding in the UK has grown from £28m in 2013 to over £245m in 2015 and was the second fastest growing sector within the UK alternative finance industry.

Goldman Sachs (March, 2015) previously named crowdfunding as being globally “potentially the most disruptive of all the new models of finance”.

In 2015 the UK Seed and Venture stage equity investment market was reported to be worth £2.4bn with the total equity investment in the UK for private companies estimated to be worth £5.3bn. This presents a significant opportunity for Crowdcube to further penetrate these markets and grow the equity crowdfunding market.

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.

Successful exits

In July 2015, E-Car Club, an electric vehicle rental business championing the future of the green sharing economy, produced a world first exit from the CrowdCube 'Funded Club'. E-Car received a significant investment from Europcar, Europe's largest vehicle rental business. 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'. This is Europcar's first acquisition since its IPO on the Euronext in early June 2015. 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, 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.

Funded campaigns

Equity

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

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”.

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:

Awards 2015/16

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. Designed to empower F1 fans to help Caterham return to race, the project successfully completed on the 14th November, with Caterham F1 finishing in 17th place with Grand Prix newcomer Will Stevens. Caterham F1 went bankrupt in 2015.