Crowdcube aims for the IPO market

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Investment crowdfunding platform Crowdcube has raised £6m of investment, led by UK stockbroker Numis.

Tim Draper and London-based Draper Esprit have also joined the new funding round alongside existing backers venture capital firm Balderton Capital.

Crowdcube plans to use the investment to grow, continue the expansion of its team and develop new products. One of these will be to create a new solution for companies going public.

Numis has raised £10bn for businesses since 2009 through over 46 IPOs. It will work with Crowdcube and the regulators to enable large high-growth businesses who are ‘going public’ by listing shares on the London Stock Exchange’s Main Market or AIM. 

Co-founder of Crowdcube Darren Westlake said he wants to “put the public back into IPO”.

“We’ve been interested in exploring public markets and how crowdfunding can dovetail with what’s going on in bigger fundraisers for some time.

“What was of particular interest was that if you look back over the last 20 years, in all of the major IPOs there has been less and less possibility for retail investors to get a piece of them. They are largely dominated by institutional investors and they never really get to see light of day to the public, which is ironic given as they’re called initial public offerings,” he told BusinessZone.

“When we started exploring why that was, it was clear that from someone like Numis’ point of view, it’s really difficult and time consuming to manage the retail element and try get thousands of people involved in those fundraisings. It's much simpler for them to deal with just one institutional investor.

“So we said, ‘what if we could manage that part for you?’ because that’s our day to day bread and butter, to deal with those kind of people and to do that scale of investment and we have the infrastructure to execute that,” he added.

Crowdcube’s ambitions are to get involved with IPOs as large as Just Eat and similar raises that have gone in the last few years.

“We don’t think there’s anyone else doing that at the moment,” Westlake said.

It may take them six months to get the product up and running, he added, and while other countries may be on the agenda in years to come, they’re very much UK focused right now.

But, it will also put some of the £6m investment into growing its Spanish arm.

Crowdcube celebrated its first company exit in July 2015, when E-Car Club, which raised investment in 2013, was acquired by Europcar and delivered a multiple return to its investors. 

The crowdfunding company has amassed an investor community of nearly 200,000 and attracts seasoned entrepreneurs of often VC-backed businesses like Eden Project, JustPark, River Cottage and Camden Town Brewery, as well as startups.

Almost £100m has been successfully invested through the site since its launch in 2011.

Earlier today, it was also announced that equity crowdfunding platform Seedrs’ £10m investment round values the company at £30m.

Nick Levine, chief accountant at LimeGreen and former investment analyst at Crowdcube told BusinessZone he thinks the equity crowdfunding market “is a constant PR battle, with the market leaders in the space fighting one another, and not missing a trick, to stay at the top of the SME news agenda".

He added that he finds it surprising they haven’t gone into other partnerships, such as an integration with cloud accounting software.

“This presents a huge, as yet untapped opportunity, to reach small to medium-sized businesses seeking equity finance. This is a go to market strategy which has already been adopted by debt crowdfunding platforms,” he said.

Rachael Power
Small Business Editor
Sift Media
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