Crowdcube Review: UK’s #1 Leading Equity Crowdfunding Platform
Investing in early-stage startups used to be a privilege reserved for the wealthy as you will see in this Crowdcube review. As a result, you were pretty much out of luck unless you had the necessary contacts and knew your way around secondary marketplaces.
Investing in early-stage enterprises is now possible for the average person, thanks to the internet. Businesses can use crowdfunding sites to raise funds from the general public to help them get started.
Crowdfunding flips the typical corporate funding approach by allowing friends, family, and individual investors to contribute to early-stage investment.
On Crowdcube, business owners may pitch their concepts to investors, offering them money in exchange for shares.
Crowdfunding has become a popular technique of generating cash for various reasons, so it’s only natural to spread to the stock market.
Crowdcube is. Is it a decent place for investors to put their money and secure some equity? Do the funds that have been invested have a fair probability of producing a profit?
In this Reddit-Style Crowdcube review, we’ll answer those questions and more.
Since its beginning nearly ten years ago, Crowdcube has raised millions of pounds for UK-based businesses and allowed many investors to get a foot in the door on early-stage company prospects.
The main claim to fame of Crowdcube is that it makes early-stage financing accessible to the everyday person. Investors can start with as little as £10 to claim equity in a privately held company.
This means that shareholders are entitled to future earnings generated by the business.
Crowdcube might be thought of as a more investment-oriented version of Kickstarter.
The main difference is that when you donate to a project, you receive a portion of the company’s stock if the fundraising campaign is successful.
Business owners may use Crowdcube’s marketing services to promote their initiatives and expand their network.
Crowdcube, for example, offers numerous social media interfaces, making it a rich ground for marketing ideas.
Crowdcube has recently made headlines due to its merger with Seedrs, another renowned equity crowdfunding site in the United Kingdom. Crowdcube and Seedrs aim to merge in early 2021, with a combined worth of $140 million.
In its ten years of existence, Crowdcube has had a moderately successful track record. Famous companies like Camden Town Brewery and E-Cat Club got their start on Crowdcube. They were subsequently acquired for a large sum of money, resulting in a significant profit for equity investors.
What are the Crowdcube UK benefit of investors?
Crowdfunding follows a reasonably straightforward approach. You can browse the marketplace and hunt for interesting projects once you’ve created an account.
Crowdcube projects span many industries, including technology, real estate, food service, industrial businesses, and much more.
When you find a campaign you like, click on it to go to the pitch page, where you can learn more about the company’s business strategy, market projections, and other essential facts.
Pitches also include videos in which they show their methodology and projected business performance models.
When you identify a project that interests you, you can invest the given minimum amount or more, and if the firm meets its earnings objective within the specified time frame, you will have a claim to stock.
If the campaign does not reach its crowdfunding set goal, the investor will be refunded in full. As a result, you won’t have to pay anything unless your investments fulfill their earnings targets.
Investors can deposit their money into two fundamental models on Crowdcube: joint-venture profit share models (equity models) or fixed income models (bonds).
It’s similar to the conventional investments in the first group. You pay to own shares in the firm, and any returns on the company’s value will be identical to the number of shares you possess.
The fixed income model entails lending money to businesses with the promise of repayment in limited quantities, plus interest, by a specific date.
If you’ve ever invested in corporate bonds, the fixed income strategy is similar, but it’s done through crowdsourcing.
The average annual interest rate on fixed-income assets is 7% at the time of writing. So, as you might guess, this alternative has a lower risk profile than the equity model, but it also has a lower return potential.
One thing to bear in mind is that you cannot sell your shares or buy shares from pitches that have already closed, unlike traditional private markets.
Only when the pitch period is open can you invest in a startup.
So, if you invest in a firm, you must wait to see if the pitch meets its objective and the project is completed before you can expect to start generating money or sell your shares on the open market.
What are the Crowdcube benefits Corporations?
If you wish to use Crowdcube to raise funds, you must first create a campaign plan and send it to Crowdcube. They will release your project to investors once approved and verified that your data are fair and correct.
Businesses can pick from three primary “tiers” on Crowdcube, depending on how much money they need to raise.
The Seed Finance tier is for enterprises with revenue goals ranging from £50,000 to £249,000.
The Early tier is for enterprises that have previously been seeded but require more funding to grow, with profit goals ranging from £250,000 to £750,000.
Finally, the Growth category is for businesses that aim to expand their operations and have earnings goals of £751,000 or more.
Crowdcube’s secondary liquidity for later-stage enterprises is one of the best features for businesses. This feature allows public backers to get some liquidity on their investments without going through the burden of a traditional public IPO.
Crowdcube has had some success with crowdsourcing. Monzo, for example, raised over £24 million from over 35,000 investors on the site, while Chip raised £4.7 million from around 10,000 investors.
You must first meet specific standards before applying for funding.
Your business must be a limited company based in the United Kingdom or Ireland, and specific industries are excluded, such as sexual businesses, property development, and theatrical productions. You must also have a current Companies House number.
Crowdcube will also look at your company’s structure, as well as any current shareholder relationships. Then, they’ll put your firm on the market to make investments once they’ve reviewed and approved it.
When you start a pitch with Crowdcube, the company will employ a data-driven approach to give you real-time data on how your business is doing.
It will also reveal which marketing channels are most effective in attracting visitors to your project. So Crowdcube is, in many ways, a crowdfunding platform as well as a quasi-marketing platform.
For listed projects, Crowdcube does not charge any active listing or maintenance fees. After the earnings goal is accomplished and the project period closes, they only charge a 7.5 percent fee on the profits made from the shares.
What Can I Expect in Terms of Return on Investment?
Investing in Crowdcube initiatives is risky by nature, as it is with any early-stage investment.
With that risk, though, comes the possibility of a significant return. The average return across a diverse portfolio was 2.2 times the average market return, according to a Nesta analysis of angel investors.
It’s critical to remember that the vast majority of these profits came from a small number of corporations.
The relative lack of liquidity, dividends, and momentum loss are key dangers of investing in early-stage firms. Unfortunately, it’s expected: a company pitches for seed money, gains a lot of traction, but then disappoints and fails to last long.
Even if a firm does well in its early stages and generates a lot of attention, it is not guaranteed to maintain that momentum.
If you invest in Crowdcube, ensure sure your money is adequately diversified across various businesses. Investing in traditional stock exchanges works on the same principle.
Is it Safe to Crowdfund? Is It Real?
Yes, Crowdfunding is a suitable and safe medium. The Financial Conduct Authority regulates them (FCA).
They also go to great lengths to ensure that the platform’s companies generate legitimate funds. They double-check that pitches have all the necessary information and that the company is legally sound.
On top of that, they do background checks on business owners to uncover any negative information that could jeopardize investor confidence.
Pros and Cons of Crowdcube
- It simplifies the process of investing. Crowdcube is a fantastic way for the average investor to get in on the ground floor before it explodes. What was once only available to wealthy investors is now closed to the general public.
- Benefits from taxation. The majority of Crowdcube projects qualify for SEIS tax benefits, such as rebates and discounts on income taxes. On Crowdcube’s website, you may learn more about these tax benefits.
- Market coverage is excellent, except for a few industries. If you are unable to participate, you can invest in a variety of businesses. With Seedrs’ imminent merger, the market will be even more covered.
- Small businesses will benefit from your assistance. You may also feel good about helping small businesses flourish and develop by using Crowdcube.
- There is a significant danger involved. Investing in early-stage companies is inherently hazardous, with no certainty of a profit.
We hope you enjoyed our Crowdcube review and stick around a while to find out more about all that Crowdfunding Bum has to offer. You will find ample reasons to choose us as your funding source. Fresh out of excuses? Click the link below.
or see our frequently asked questions page
Bernardo Pereira instinctively knew that funding a Crowdfunding campaign shouldn’t be so difficult. This Crowdfunding Bum founder and sole owner is a visionary thinker who wanted to place the power of generosity in the hands of all those who choose to embrace it. Strategically, he developed the world’s first built-in backer mechanism within the platform to auto-fund campaigns. This website is a manifestation of his vision.