In their second installmant of “Where They Are Now?”, alternative finance research firm AltFi has published an update on the status of crowdfunded companies since 2011.
According to AltFi’s report;
“A high proportion of crowdfunded companies remain active – 73.60% of the capital raised in the 2011, 2012 and 2013 cohorts are still trading. i.e. even in the older cohorts the survival rate remains high.”
Taking a portfolio perspective, AltFi estimates a total IRR of 8.55%. When you take into consideration EIS/SEIS programs, significant tax benefits for investors in SMEs, the IRR jumps to over 19%.
AltFi reviewed the top platforms in the UK including: Crowdcube, Seedrs, SyndicateRoom, AngelsDen, Code Investing and Venture Founders. These investment platforms dominated this sector of finance. AltFi used a color coded system to highlight the status of crowdfunded firms. The 6 categories included: Exit, Green Plus (up round), Green, Green Minus (down round), Amber (uncertain) and Red (shut down). Out of 751 companies that have raised capital since 2011, the results are as follows:
- Red – 88
- Amber – 79
- 34 – Green Minus
- 533 – Green
- 216 – Green Plus
- 5 – Exits
The report by AltFi is a needed review of industry success. While still young, it is important for industry participants to provide transparent data including failure rates. In a release today, Crowdcube co-founder Luke Lang called on the industry to band together and set a common metric of platform and issuer performance – an important step for the industry to mature and grow.
The report is available for download here.