Crowdcube is the largest investment crowdfunding platform in the UK and the first platform to launch in the robust UK crowdfunding market – a market that in many ways leads the rest of the world.
Founded in 2011, Crowdcube has helped to raise growth capital for over 1000 securities offerings, with more than £800 million having been invested via the platform. Crowdcube boasts a population of over 860,000 registered investors – an impressive number. Countless jobs have been created as the platform has emerged as a vital variable in fueling the UK innovation sector of the economy.
While many of the businesses seeking growth capital on the platform are very early-stage ventures a growing legion of more established businesses has utilized the service to raise funding while enlisting investors committed to a venture’s success.
Today, many well-known brands have crowdfunded on Crowdcube. Names like leading digital banks Monzo and Revolut. Or the global brewery BrewDog. Many issuers return for successive funding rounds. It is not just about startups anymore as established firms see benefits in having a broader shareholder base frequently alongside big VCs.
International funding rounds have seen exceptional growth during the last year – key for future success. According to Crowdcube, during 2019 overseas offerings raised €26.6 million – a 100% increase versus the year prior.
While Q4 and full-year 2019 numbers have not yet been released, Q3 numbers showed solid ongoing growth in top-line revenue for the firm as the number of successful offerings moves upward.
Just like any other early-stage venture, the path to success has not always been easy, but Crowdcube has iterated and adapted as the concept of crowdfunding has taken hold and the market has evolved.
Recently, Crowdfund Insider corresponded with Crowdcube co-founder Luke Lang for an update on platform progress. Our discussion is shared below.
International offerings are playing a greater role in Crowdcube performance. Do you expect this to continue going forward?
Luke Lang: January’s not done yet and already more than 3000 investors pledged more than €4.8 million to Belgium e-bike maker Cowboy, to make it our biggest cleantech raise.
2020 will see us build on our phenomenal performance raising investment for overseas businesses. From 2018 to 2019, investment more than doubled to €26.6 million, with Spanish-based fintech ID Finance raising €5.2 million in November. We dominate the field in Spain, where Pepe Borrell and his team lead the charge. We’ve moved from seed to Series A+ due to market demand and the consolidation of our model.
We’ve welcomed the new European Commission rules, which are now being applied to crowdfunding services in the EU. The rules are a step closer to formalising the industry, and they’ve been designed to open up entrepreneurship and investing. European companies will be able to benefit from the new rules by raising with us.
Most of the international offerings have been from EU members. Will you be pursuing offerings beyond continental Europe?
Luke Lang: The biggest markets in the EU serve up huge opportunities, so we’ll concentrate on those for the moment. Our strategy has been to build a solid long-term foundation in the UK and Spain and now we’ve done that we’ll look at the biggest markets in the EU, which by themselves house massive opportunities.
Any plans to expand beyond Europe? What about the US, Asia or elsewhere?
Luke Lang: We’ve funded companies from Spain, Belgium, Portugal, Sweden, Singapore, and the US, amongst others. If we were to go beyond the EU, our strategy would be to replicate the success we’ve had in the UK and Spain. We keep an eye naturally on the US market, and already have a co-listing offering with our American partners SeedInvest.
There has been a trend to facilitate larger offerings. Do you expect a greater focus on later-stage firms?
Luke Lang: In the last 14 months or so, we’ve seen bigger ticket raises, such as Monzo, Mr. & Mrs. Smith, gohenry, JustPark, Curve and Freetrade raise £5 million or more each with Crowdcube.
Internationally, nine of the top 10 largest equity crowdfunding raises by the number of investors in Spain have been with Crowdcube, with the top 5 by investment funding in 2019.
Monzo’s £20 million raise with Crowdcube in December 2018 and a tremendous 2019 for overseas raises epitomizes a deeper and broader trend towards investment in later stage firms.
It’s great to see these businesses mature and transform the market, the way we bank, eat and live. Our passion is still to enable funding for startups, and they still make up the majority of raises completed on Crowdcube.
What are your thoughts on Brexit? How will this impact Crowdcube’s operations?
Luke Lang: Things are going well despite Brexit as we continue to grow revenue quarter on quarter with Q3 2018 being our 7th record quarter in a row.
That said, I obviously don’t have a crystal ball.
So had Brexit not happened we might have grown even faster, or slower. Regardless of the wider political and economic environment, we continue to work tirelessly to grow Crowdcube and shareholder value.
Fintech has been a hot sector for the UK in general but it has also been a boon for platforms. Do you expect this trend to continue? Are there other sectors of industry where you see an opportunity for online capital formation?
Luke Lang: Fintech has been the standout star for Crowdcube and of course in general in the UK. Our top three raisers are Monzo, gohenry and Freetrade, all early disrupters of their segment of fintech, but now transforming the way all ages are banking, saving and investing. Fintech has generated our largest and fourth-largest overseas in ID Finance (€5.2m) and Bnext (€2.6m). Since 2011, Crowdcube’s seen £120m successfully invested in the sector and 66% of that came in just two years, 2018 and 2019. To crown that Monzo and Revolut have gone on to become two of the UK’s 16 active unicorns.
Since you co-founded Crowdcube, what has been the biggest change to the business? Has it evolved as you expected?
Luke Lang: My co-founder Darren Westlake and I, set out together nearly 10 years ago, inspired by a belief to help entrepreneurs who were challenging the status quo with big ideas and new thinking. It was the post-financial crisis era when counter-intuitively new ideas to solving age-old problems emerged, but there was little money around to fund these ideas. Well, we disrupted the status quo and with that, we’ve now helped people all around the world achieve their dreams.
Conscious capitalism will take off this year. We and other entrepreneurs have been living this life for a long time, but now that we have the leaders of large corporations like Jamie Dimon and Larry Fink walking the talk things will accelerate throughout industry.
What are other affiliated opportunities you will be targeting during 2020?
Luke Lang: We will continue to grow our strategic partnerships because many of the institutions we partner with need our expertise to unlock guidance around the earlier and growth stage side of the equity crowdfunding industry. And conversely, they open up networks for us, which help us fund other entrepreneurs. And we will carry on educating and informing the wider market, and inspiring new businesses to crowdfund both in the UK and Europe.
Any predictions for the coming year?
Luke Lang: Yes, the European rules around equity crowdfunding have raised the cap to €8 million and that’s a major development. It will fire up the industry and get businesses, entrepreneurs, and institutions to think seriously about collaborating with Crowdcube. Later-stage businesses are coming to us to crowdfund, and we expect this to continue strongly through 2020.
Businesses are staying private for longer, but they’ll still need financing to grow. As the lure of IPOs diminishes Crowdcube will become even more of an attractive option for businesses to fundraise.
Sector-wise, absolutely, we are all alive now to the impact of humans on the environment, so we are seeing Cleantech taking off, with incredible raises by Cowboy, Recycling Technologies and Magway (on the site now), to name a few. Cleantech is our fastest to fund sector.
There are so many other sectors I would name as ones to watch: healthy living, food and drink, Agritech, Edtech and Healthtech. These are the industries in which progressive innovation will touch on pretty much every aspect of our lives.