Crowdcube is a British investment crowdfunding platform, established by Darren Westlake and Luke Lang in 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 "angel" investors and banks. 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 does not, 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.Norman, Tessa. "FCA social media rules create retweets 'minefield'" Money Marketing, March 2015.

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 product or service in return for their donation.

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. 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 were exempt. It was also criticised for posting the news of the fees within the FAQs, rather than emailing all the investors.

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 the 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.

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.

In 2019, Parcel2Go, which had raised funds on Crowdcube in 2017, was subject to a management buyout backed by Mayfair Equity Partners.

Funded campaigns Equity

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

Business Amount raised No. of investors Equity released DateFreetrade£8,890,4687,1701.353%November 2021Cornish Lithium£5,999,9951,0126.81%June 2021Sunswap£501,34878821.18%January 2021OOONO£1,520,7021,6974.41%December 2020Sliabh Liag Distillers£2,265,9101,15813.61%September 2020Belluscura£538,1403029.6%April 2019Monzo£20,000,00036,0062.04%December 2018Recruitive£1,170,00038154.64%March 2018Manigo£510,63035514.33%January 2018Parcel2Go£1,057,7301,3082.58%November 2017Kar-go£321,72028115.11%July 2017 Revolut £1,007,050 433 2.39% September 2016 Movem £200,000 116 20% September 2016"Forbes - Why start ups are ignoring the risks" Forbes, September 2016. GoHenry £3,994,980 2,372 15.98% June 2016 Chilango £3,433,010 1,300 8.72% December 2015"Chilango Closes Funding on Crowdcube at £3.4 Million. Will Open 50 New Locations" Crowdfund Insider, December 2015. Adzuna £2,149,355 552 5.89% June 2015"Job search site Adzuna Raises 1.5m via Crowdcube to get Britain Working" Business Matters News, June 2015. JustPark £3,700,000 2,919 15.61% March 2015"JustPark becomes UK's largest equity crowdfunded start-up" TechCity News, March 2015. Open Desk £310,010 171 18.59% June 2014"OpenDesk raise £150,000 in 12 hours" Westminster Impact Hub, June 2014. SilkFred £145,610 71 24.27% 2014 LOVESPACE £1,574,590 259 28.17% May 2014"LoveSpace hits £1.6m as Shazam Venture Capital firm adds £250,000 to funding pot" UK Business Angel Association, May 2014. Crowdfunder £500,000 - 10% April 2014"Reward-based crowdfunding platform secures £500,000 target in just over three hours" Startups, April 2014. Zero Carbon Foods £659,480 454 29.04% March 2014"Growing under the Tube: 141% Funding for Zero Carbon Food’s Crowdcube Campaign" Crowdfund Insider, March 2014. Hab Housing £1,972,150 642 26.29% September 2014"Kevin McCloud is a hit with the Crowd(cube)" Management Today, September 2013 E-Car Club £100,000 63 20% December 2012

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".Bridge. Rachel, "Soapbox: Established businesses should consider using crowdfunding too, says Adam Blaskey" Telegraph, December 2014. In June 2014, Chilango launched Crowdcube's first mini-bond campaign. Since then, several other businesses have launched mini-bond offerings via the Crowdcube platform. Some of the businesses that have funded bonds via Crowdcube include:

Company Amount raised No. of investors Interest paid Date Brew Dog £2,312,000 815 6.5% Oct 2015 Taylor St Baristas £1,805,000 493 8% Jan 2015"Niche coffee house chain Taylor St Baristas secures £1.8m Crowdcube mini-bond" Startups, Feb 2015. Eden Project £1,500,000 355 6% October 2014"Eden Project crowdfunding raises £1.5m in 20 hours" BBC News, October 2014. River Cottage £1,000,000 285 7% June 2014"Fearnley-Whittingstall's River Cottage raises £1m through mini bonds" Real Business, June 2014. Chilango £2,035,000 347 8% June 2014"Will Chilango's £2m Success Herald An Affordable Mini Bond Revolution?" Forbes, June 2014.

Events

Caterham F1 In November 2014, Crowdcube partnered with Caterham F1 to raise £2.35 million to fund the team for the final Grand Prix of the season in Abu Dhabi. Designed to empower F1 fans to help Caterham return to racing, the project was successfully completed on 14 November, with Caterham F1 finishing in 17th place with Grand Prix newcomer Will Stevens. Caterham F1 went bankrupt in 2015.

See also Comparison of crowdfunding services

References

External links