By Maximilian Clarke
The company behind a popular crowdfunding website for start-ups, has used its own website to secure £300,000 investment from 162 investors to fuel its next phase of growth.
The investment was raised in only 10 days and finishes an impressive first year for the start-up that is bucking the economic gloom and proving that crowdfunding is a viable alternative source of business finance for companies.
The Exeter-based Crowdcube is the first crowdfunding website in the world that enables members of public to invest and receive shares in UK-based companies that register on the site to raise finance. Instead of competing for limited business angel or venture capital funding, or hard to get and expensive bank finance, small businesses use Crowdcube as a platform to connect with a nation of ‘Armchair Dragons’ — ordinary people who provide investment in exchange for equity.
The success of crowdfunding has caught the eye of the government with business secretary Vince Cable last week announcing steps to create a new taskforce to boost the future of business finance for SMEs (small to mid-sized enterprises), including a focus on crowdfunding. In his speech Cable described “..exciting innovations that provide alternatives to bank lending...Businesses are selling bonds directly to their customers, and peer-to-peer lending has opened up opportunities for savers to invest directly in the fortunes of UK businesses. I want to investigate and dismantle any barriers to these and future innovations.”
“Business finance is at a critical turning point as last week’s announcement by Vince Cable highlights," commented Darren Westlake, co-founder and CEO of Crowdcube. "The future success of Britain’s economy is dependent on empowering small business Britain to succeed and grow, but access to traditional methods of funding are often a barrier. The emergence of alternative sources of business finance, like crowdfunding, is already proving to be a very effective and popular solution for both entrepreneurs and investors.”
He continued, “We are delighted to have used our own website to raise the
money we need to accelerate our growth. Since launching in February 2011 we
have raised £1.7 million in finance for 9 small businesses needing
investment to grow and now has 37 businesses registered on the site. This
investment will mean that we can hire support staff and continue to develop
Crowdcube into a world-class funding platform that supports entrepreneurs
with the finance they need to succeed in the future.”
Another small business, Edge Forecast Software, funded on the same day as
Crowdcube and raised £15,000 in return for 20% equity in its financial
forecasting solution. It becomes the ninth successful deal on the site.
Crowdcube has over 6,700 registered members who are seeking investment
opportunities. Small businesses and investors can sign up to Crowdcube for
free. Entrepreneurs can register their business idea or company at
www.crowdcube.com and only pay a fee when they successfully hit their
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