The UK’s original equity crowdfunding platform is attempting to open the IPO market to individual investors.
Crowdcube has raised a fresh £6m in a round led by Numis – a leading UK stockbroker and corporate advisor. Prolific Silicon Valley investor Tim Draper and Draper Espirit have also piled in on the round, with existing backer Balderton Capital also partaking. The renowned Balderton also backs disruptive technology companies Zopa, Nutmeg, Revolut and GoCardless.
Numis has been singled out by the platform as a key strategic partner. The stockbroker has raised £10bn through over 46 IPOs since 2009. Numis will now work with Crowdcube (and of course the regulator) to open up LSE/AIM listings to retail investors, through the Crowdcube platform. For Crowdcube, which typically caters to the startup end of the business spectrum, the Numis affiliation represents an attempt to service a broader portion of the business lifecycle.
Oliver Hemsley, Founder and CEO of Numis, commented:
“Crowdcube has created an impressive business model and technology platform that makes it possible for people to join together to finance pioneering businesses. Numis has a long track record of helping companies access funding for growth and this investment in Crowdcube will put Numis at the centre of the entire investment chain, from initial start-up capital all the way to IPO. We are very excited to be part of an innovative fintech solution to help the public markets evolve and connect retail investors directly with fast growing businesses.”
The £6m cash influx will be used to generally accelerate growth, expand the team (which is currently around 70 people strong, spread across London, Exeter and Barcelona), build on the company’s prolific marketing activities, and drive on product development. The IPO solution is a major part of the latter objective.
Darren Westlake, Co-Founder and CEO, explained:
“Our goal is to solve the funding continuum for ambitious, high growth businesses; delivering seed-capital right through to IPO. We have a proven track record of disrupting the status quo. With high calibre new investors joining the team who share our vision of widening companies’ access to capital, this new round of funding puts us in a very exciting position.”
Crowdcube’s primary rival in the UK equity crowdfunding sector announced an investment round of its own last night. Seedrs has already raised £7.5m from acclaimed fund manager Neil Woodford’s firm WPCT and venture capital fund Augmentum Capital. The fundraise will be closed out with a £2.5m round, hosted by the Seedrs platform. In the arms race between the two platforms, international expansion stands out as a clear battleground of the future. For now, their paths are yet to cross overseas, with Crowdcube setting up shop in far off New Zealand and continental Europe, and Seedrs establishing a presence in the US market.
Crowdcube isn't the first crowdfunding platform to make a move into the IPO space, but it is the first to commit to developing a bespoke product for companies that are going public. Both SyndicateRoom (Mill Residential REIT) and Seedrs (Domaine Chanzy) have previously attempted to host a segment of an IPO. The REIT campaign closed, the company listed on the AIM, and SyndicateRoom investors achieved a modest return. Clearly the risk profile of a publicy traded company (or soon-to-be publicly traded company) is very different to that of a startup. Dabbling in IPO investment opportunities should provide Crowdcube investors the chance to achieve a greater balance of risk exposures within their investment portfolios.
We’ve not yet received any word on the valuation that has been attached to the £6m round. For context, Seedrs’ Series A carried a £30m valuation. We’ll be watchful for some hard numbers on the Crowdcube price tag.