The UK government is now channeling funds through the equity crowdfunding sector.
Crowdcube is to become the recipient of £5m of government money. The funds will be allocated – alongside private investor capital – to technology, digital and science-based businesses using the Crowdcube platform. The vehicle facilitating this investment is called the London Co-Investment Fund (LCIF). The fund has identified and partnered with six competitively selected investment alleyways – within which Crowdcube stands as the lone crowdfunding platform. Venture Capitalists and Angel investors make up the remaining chosen distributors.
Crowdcube’s £5m is the largest amount that any of the 6 LCIF beneficiaries will receive. The platform’s consortium partner – Braveheart Investment Group – will be in charge of deciding how best to deploy the funds among Crowdcube’s various fundraisers.
“For the UK Government to invest in London’s top start-ups through Crowdcube, alongside the crowd, is an exciting prospect and underlines Crowdcube’s reputation as an effective way for high growth tech firms to raise finance.
“Working with Braveheart, with its extensive fund management experience, we’re determined to deliver returns for investors and help London’s best technology, digital and scientific start-ups secure the investment they need to expand, create jobs and become the global pioneers of tomorrow.”
The LCIF is a government-backed fund designed to tackle the chronic funding shortages faced by quality startup enterprises. The fund has £25m to play with over the next 3 years – courtesy of the Mayor of London, via the London Enterprise Panel’s “Growing Places Fund”. The money is to be invested in 156 seed-stage companies within the technology, digital and science sectors.
Our colourful Mayor of London, Boris Johnson, weighed in:
“London’s tech sector is flourishing and the city is a hotbed of talented young and ambitious people buzzing with exciting ideas who are setting up new companies in their droves. Despite this boom, we know that many budding start-ups find it difficult to raise the finance they need to grow. This new fund will ensure the tech-giants of the future can get the support they need to bring their ideas to reality and deliver jobs and growth for the capital.”
Today’s news marks the first time that the government has taken steps to back equity crowdfunding. After offering various shows of support within the peer-to-peer arena via the British Business Bank, equity crowdfunding investment seems a natural progression for a government that is an open and avid supporter of the alternative finance industry. And the equity crowdfunding sector has more than earned that support, having accounted for a cumulative funding total of at least £56m in the UK thus far – a world-beating figure.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.