When fintech met crowdfunding

By Luke Lang on Monday 21 October 2019

OpinionSavings and Investment

Something special is happening at the intersection of retail investors and financial technology, writes Crowdcube's Luke Lang.

When fintech met crowdfunding
Image source: Luke Lang, Crowdcube's CMO and Co-Founder.

Luke Lang is CMO and Co-Founder of Crowdcube.

It became clear that fintech companies began to prize crowdfunding three years ago. Monzo crashed our servers in 2016 when it raised £1m in 96 seconds. Last December, the now-serial crowdfunding neobank raised £20m from retail investors. 

The staggering thing about Monzo’s raise – and it speaks volumes about where crowdfunding and fintech have reached – is that it did not need to raise the £20m from any of us on the street. In October – i.e. just two months shy of the raise – the bank had closed an £85m round led by VC firm Accel. Raising £20m is no walk in the park. You need to build a prospectus, which is a lengthy and expensive process. Monzo’s crowdfunding raise capped all investments at £2,000, meaning the team chose to have more investors to look after. 

The world’s leading fintechs are using crowdfunding to cement and enhance their relationship with their customers. The latest Unicorns report from Beauhurst, an independent analysis firm, identifies the UK’s 21 unicorn companies – those worth $1bn (around £760m) or more. Of the 21, six are fintechs, and two are digital banks: Monzo and Revolut. Both have turned to crowdfunding – at a time when they are the darlings of the tech scene and its investors – to raise capital. 


To answer that, I believe we have to go back to the financial crisis. After 2008, a chasm opened up in financial markets, encouraged by a profound lack of trust. We’re well-versed with the outcomes. The banks that survived had to change their ways, and new players came onto the scene. A decade later, it is the novel relationship between these latest entrants and consumers that gives us an idea of what the future looks like: a world where any business-to-consumer company knows that sharing ownership with its customers is fundamental to long-term success. This is the cooperative movement of the twenty-first century, and it is driven by technology.

Curve, Nutmeg, Freetrade – all these leading fintech companies that want as many as possible to profit from their success. In the last 12 months, we have facilitated the raising of £67m across 21 fintechs. By giving people skin in the game, these firms are securing a base of customers, and champions. From a commercial perspective, each customer’s lifetime value is hugely enhanced. Our customers find that their shareholders are less likely to move providers, more likely to refer friends and family, and more likely to buy more products and services. 

Making consumers owners and giving them a say has become integral to how these companies run. Indeed, many are now building their own platforms to manage ownership. What does this tell us about the future? Here are businesses offering equity – not for money, not because they want to list, but to build an affinity with their customers. As these relationships evolve, both sides benefit: greater engagement – better products – more customers – growth – profit – both sides capitalise.  It could be called the democracy of building business.

Technology is making this shift around the consumer possible not just in finance, but across markets. While the former has emerged as the vanguard, there are other non-tech sectors that have leapfrogged traditional ownership structures and cemented their own success. Food and beverage, historically underserved by the financial world, was an early adopter of crowdfunding. BrewDog is the poster child for this – a four-time Crowdcube funded brewery. It has 120,000 investors, aka Equity Punks, who, in its words, kick-started the craft beer revolution and, presumably, enjoy its beer. The prospect gets so much more exciting when you start to think of the markets that are hardest to disrupt, build a community around, and fight injustices: insurance, mining, the coffee industry, healthcare.

We are going to see another huge change: big businesses are signalling they’re stepping up beyond paying lip-service with grandiose CSR initiatives. 

This might mean that the corporates of the future are successful for different reasons. Rather than capitalising on economies of scale, stacking products high and selling them cheap, or building brands based more on myth than substance, they will be the companies that successfully harness network effects, focus on being product-first, and bake their customers into their brand. Corporatism will find it harder to survive. 

Imagining a future where every high street will be populated overwhelmingly by businesses that have hundreds, or thousands, of owners, customers and advocates is not difficult. The twenty-first century will see a redefining of ownership as the customer is put at the centre of business’ strategy, products and funding. We are about to enjoy the age of the consumer.

Luke Lang is CMO and Co-Founder of Crowdcube.

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