Crowdcube today publishes the prospectus for its planned £5m+ crowdfunding round, revealing plans to ramp up activity on its secondary market. The company intends to create an environment in which investors can sell out of shareholdings – if demand exists – meaning that investor returns will not necessarily be contingent on liquidity events such as an IPO or trade sale.
While Crowdcube has already delivered investor returns in a few instances (through the acquisitions of Camden Town Brewery and E-Car Club), the vast majority of the platform’s successfully funded campaigns are yet to bear fruit for investors. Some of the platform's fundraisers have failed.
AltFi Data delved into the performance of equity crowdfunding campaigns in November last year, finding that around 80% of the sector's successfully funded companies were still trading. Crowdcube has funded a little shy of £150m to date, according to the Liberum AltFi Volume Index UK, meaning that around £120m is likely tied up on the platform, with investor returns currently contingent on an IPO or trade sale.
Darren Westlake, CEO and co-founder of Crowdcube, said: “With more growth stage and venture capital backed businesses turning to our crowd to raise finance, there is a real opportunity to provide early investors with returns through a secondary market on Crowdcube. Currently many early-stage investors are locked into their investment for the long-haul, a secondary offering of this nature will provide greater flexibility for equity investors, whilst further democratising investing by providing another avenue for anyone to invest in great British businesses.”
Crowdcube has already received over £50m in expressions of interest for the forthcoming fundraise, which goes live for registered investors at midday today. The round opens to the general public 24 hours later. The round – which will be hosted on the platform itself – represents the first time that a crowdfunding platform has raised money under a prospectus, which allows for more than €5m to be raised.