Exeter's Crowdcube celebrates its third year on top
Exeter-based Crowdcube is celebrating its third year in businesses as the world’s largest Equity-based crowdfunder.
Crowdfunding has come to prominence in recent years with online companies such as Kickstarter allowing users to donate funding for a wide variety of projects in exchange for rewards, based on the amount donated.
Founded in 2011, Crowdcube became the world’s first equity-based crowdfunder, where the rewards for donations - generally additional or exclusive content- are instead replaced by shares of a company’s potential future profits.
Since then the industry has flourished and is already responsible for creating around 1900 jobs in the UK alone, while Crowdcube individually has raised upwards of £19.9million in the last three years to fund new 103 British businesses.
Darren Westlake, CEO and co-founder comments, “When Luke [Lang] and I founded Crowdcube equity crowdfunding didn’t exist; now it’s all over the media and is a mainstream source of capital for many businesses.
“In 2013 we grew 562% on the year before, securing over £12 million for 54 deals which is phenomenal. With over 100 applying to us to seek finance each month, it is clear that Britain is not short of entrepreneurial spirit.”
While consumer enthusiasm has recently diminished for donation based crowdfunding sites such as Kickstarter, caused in part by a proliferation of poorly thought-out or undelivered projects, the business orientated approach of equity crowdfunders are going from strength to strength.
Indeed some companies such as the specialist careers service, Escape the City, have turned down offers from venture capitalists in favour of equity crowdfunding.
As Escape the City, which offers advice and contacts to help people leave careers in the city to start businesses or find new work elsewhere, raised £600k with Crowdcube the decision to turn down the more traditional investment has been somewhat vindicated.
This break from tradition also seems to carry through to Crowdcube’s investors boasting a far higher share of female users (25%) than that of established angel investment networks (just 3%).
Most investors also want a role in the business they invest in, with many being able to take their own industry expertise through into the start-ups.
The UK’s success with businesses like Crowdcube has quickly become the model for a number of companies across the world seeing a new global industry develop explosively.
While the UK, as an early adopter, is currently leading this global industry other nations are now vying for the top spot.
This is most notable in the USA where financial laws, which had previously prohibited equity crowdfunding, have been changed recently in response to the UK’s success.
Despite only becoming “legal” in the US last September, -some legislative issues remain as investors must be ‘accredited’- the Americans have quickly made up the lost ground growing a multi-million dollar industry in a matter of months.
In meantime at least, Crowdcube remains as the world’s leading equity crowdfunder and after signing up an international partner, the company, based in the University of Exeter’s Innovation Centre, now has a presence in Brazil, Sweden, Dubai, Poland, Italy, Spain and New Zealand.
While only time will tell if equity crowdfunding will continue in its rapid expansion,at the moment Crowdcube definitely have a lot to celebrate on its third birthday.
