Founded in 2011, Crowdcube is the UK’s largest investment crowdfunding platform to invest in British businesses. We thought you might like to know a bit more about crowdfunding and why our rapidly-growing crowd of 230,000 people invest on the site.
What is Crowdfunding?
For those who are new to this, crowdfunding is an alternative method of financing a business, which allows everyday investors, professionals and venture capitalists to invest as little as £10, typically through an online platform. Crowdfunding has grown at a rapid pace over the last five years, for investors and businesses alike, which is demonstrated by the £140 million of finance invested into businesses this year across the sector. With over 40,000 successful investments through the site this year, Crowdcube has raised more than £65 million for the UK’s startups and growth-stage businesses in 2015.
About Crowdcube
Crowdcube makes investing affordable, accessible and rewarding to our investor network, of which 59% of investment comes in from High Net Worth Investors and Sophisticated Investors alongside the UK government, VCs and Everyday Investors.
Leading the UK’s investment crowdfunding market with 52% market share, we have won 12 awards so far this year, including three being announced in a space of 24 hours. These awards include City A.M.’s ‘Explosive Growth Company of the Year’, Investor Allstars ‘Private Investor Network of the Year’, Shares Magazine ‘The Best Crowdfunding Platform’, AltFi ‘Equity Crowdfunding Platform for Startups’ and ‘The Most Innovative Crowdfunding Campaign of the year’ and Tech City Insider ‘Editors Choice’ to name just a few.
Popular with the crowd
All of this couldn’t have been possible without the power of the crowd and the quality of UK businesses that have raised on the platform. We have built relationships with VCs from 16 institutions including; Balderton Capital, Index Ventures, DN Capital and Octopus, just to name a few. The first Crowdcube raise took five months to raise £75,000. Three years later, the Eden Project raised £1.5 million in 24 hours, we raised £1.2 million in 16 minutes to facilitate our growth and have also had the likes of Sugru, JustPark, Chilango and 1Rebel that raised over £3 million.
With over 300 businesses that have successfully raised finance on the platform, investors have the opportunity to diversify their investments across a variety of sectors and stages of businesses, especially as the Crowdcube Bond was introduced in 2014, which allowed people to invest in growth stage established businesses. A business that was funded on our platform was E-Car Club, which raised over £100,000 two years ago and went through to exit this year. This was the world’s first successful crowdfunding exit, giving investors a multiple return on their investment.
Why should you invest?
When investing in equity pitches, there is an opportunity for you to claim tax relief against your investment, through EIS (Enterprise Investment Scheme) or SEIS (Seed Enterprise Investment Scheme). These schemes created by the UK Government seek to encourage investment into unlisted companies and is designed to help smaller, higher-risk companies to raise finance by offering tax relief on qualifying investments.
Investors can get up to 30% tax relief on equity investments. EIS Relief can be claimed on investments up to £1,000,000 in one tax year giving a maximum tax reduction in any one year of £300,000, provided you have sufficient Income Tax liability to cover it. For SEIS it’s even more generous with relief of 50% on investments up to £100,000 per tax year in qualifying shares. What’s more, Capital Gains Tax (CGT) relief may also be available if you sell, give away, exchange or otherwise dispose of your shares. Find out more about EIS and SEIS here. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent tax advice before proceeding with your investment.
Investing into Crowdcube Bonds differs to investing in equity as bonds are a debt based investment where you lend money to a company in return for a fixed income return. Whereas, equity is purchasing a percentage or share of a business, usually in the form of shares.
With the Crowdcube Bond you can get a steady fixed-rate income from your investments by lending to more established businesses. Traditionally aimed at institutional investors and out of reach of everyday investors; bonds are a way for you to lend money to more well-known brands over a set period, typically 3-5 years, in return for interest repayments.
Eden Project, River Cottage, Taylor St. Baristas and Chilango have, amongst others, all chosen this innovative route to finance growth in recent years.
You have the opportunity to be part of future successes which have the potential to deliver financial returns and make a meaningful social, economic and environmental impact. If you would like the opportunity to invest in businesses on the platform, take a look at the latest pitches here.
Investing involves risk and should be done only as part of a diversified portfolio. Investing equity in start-ups and early stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution. Bonds can be unsecured, non-convertible and non-transferable. Interest payments are pre tax and not guaranteed. Your bond investment will not be covered by the Financial Services Compensation Scheme. Crowdcube is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. Approved as a financial promotion by Crowdcube Capital Limited which is authorised and regulated by the Financial Conduct Authority (No. 650205).