By Aisling Finn on Friday 21 August 2020
The Direct Community Offer aims to open up later-stage companies to retail investors.
Crowdfunding platform Crowdcube has launched a new platform aimed at later-stage businesses.
The Direct Community Offer (DCO) allows early investors to get a return on their investments while simultaneously giving new investors the chance to get a slice of the pie too.
Early investors often struggle to achieve liquidity, a struggle that’s been made worse by companies delaying IPO, instead opting to remain private for longer.
This is not Crowdcube’s first foray into the world of secondary share sales, the platform has previously completed secondary transactions with singe investors, such as Revolut and Brewdog.
The DCO aims to “democratise the process” of secondary sales and will offer new investors the chance to buy early investors’ stakes.
Darren Westlake, CEO and co-founder Crowdcube, said: "We're seeing a global trend towards high growth, household names, looking for alternative ways of rewarding early investors with some liquidity, without the burden of going public through a traditional IPO.”
“For European businesses looking for a new, alternative IPO track, our campaign-led approach is proven to maximise awareness, engagement and investment from a business's community, and ours, to ensure early investors get the liquidity they want and as many people as possible to become new shareholders in a business they love."
The DCO will create better channels of communication between current stakeholders, new investors and the businesses that take part in the secondary share sales.
Under lockdown, fintechs have continued to use Crowdcube to secure investments from everyday investors.
The crowdfunding platform was home to three of the most popular equity crowdfunding campaigns ever, including that of digital wealth manager Moneybox, which raised £7m from nearly 17,000 investors in just two and a half days.
Similarly, investment app Freetrade raised £7.1m from over 8,500 investors in just six days.
Other fintechs that campaigned on Crowdcube under lockdown include savings app Chip, which raised £2.6m in a private round, and SME banking platform Coconut, which raised just shy of £2.5m from more than 3,000 investors.