Secondary Market: Crowdcube Facilitates First Secondary Share Trades

Crowdcube has announced the completion of its first batch of secondary transactions on their crowdfunding platform. The serviced was initially tipped for release last year during Crowdcube’s self-crowdfunding round that raised £6.6 million.  Incorporating secondary transactions is an important step in the crowdfunding platform as it provides a liquidity path for investors interested in exiting a crowdfunded investment. The first on-platform transactions took place with shares in Mettrr Technologies. Crowdcube reported that investors who originally backed the young company when it first raised capital in 2012, experienced a 9X return if they decided to sell their shares.  Mettrr raised £100,000 on Crowdcube in March 2012 from 25 investors. The company has developed artificial intelligence software that builds DIFM (Do It For Me) websites for small business owners in seconds.

Mettrr also connects small business website customers with opportunities to complete jobs generated from their own site. Mettrr raised £1 million in 2016 from investors impressed by their IP. Recently, the firm partnered with Crazy Domains – Australia’s largest domain provider.

The secondary transaction was boosted by interest by outside investors as angels acquired an ownership stake in Mettrr. While the transaction size was quite small, as just 10 investors traded £50,000 in Mettrr shares, the successful completion of the trade foreshadows additional secondary transactions in the near future. Crowdcube also stated that two other investors realized £250,000 in an off-platform transaction.  Exact details as to the technology utilized and any fees accrued to Crowdcube were not shared.

Darren Westlake, Crowdcube’s CEO and co-founder, commented on the event;

“Following successful exits from Camden Town Brewery, E-Car Club and Wool and the Gang, we’re delighted to facilitate a healthy return for investors in Mettrr Technologies, one of Crowdcube’s early success stories, as they realise their equity investment through this pioneering secondary share sale. This liquidity milestone, which comes hot on the heels of the share buy-back by Celixir, is the eighth Crowdcube funded business to deliver returns and brings the total amount now returned to investors to over £5 million, through equity exits and bond interest repayments.”

Sebastian Lewis, founder of Mettrr Technologies, said that growing the business to where it is today would not have been possible without crowdfunding and the interest generated by smaller investors;

“I’m delighted to give those investors the option of a healthy return on their investment but I’m also pleased that 17 of the original 25 crowd investors want to stay with us for the next part of our journey to global expansion; I look forward to providing further liquidity events in the future.”

Westlake added that driving returns for investors on their platform is their ultimate goal.

“We’ll continue to look to facilitate investor returns through secondary trading for businesses that are maturing as well as working with more established and venture backed businesses.”

One early investor in Mettrr, Paul Hale, said he invested £45,000 in two rounds into the company because he was confident in Lewis’ ability to succeed.

“Mettrr has evolved over time and its value now lies in its technology, widening its opportunities.  I am delighted that I have been given the chance to trade some of my shares and make a tidy profit while keeping a portion invested so that I can see the business through the next stage of its development.”

Creating a secondary exchange for crowdfunded securities addresses a pain point for the sector. Investing in early stage companies is not only risky but shares are illiquid and holding periods are measured in years to receive any return. Inevitably there will be investors that desire or need to exit before a corporate event such as an acquisition or IPO takes place. If Crowdcube can create a robust secondary market for crowdfunded securities it will be an important step for the entire industry.

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