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Crowdcube, UK’s leading equity crowdfunding platform, closed on Tuesday a self-crowdfunding round with an excess of more than £2.0 million on the targeted amount of £5.0 million. The company raised £7,330,350 in total from 3,718 investors.
The offer was opened on 18 July 2016 and was overfunded in less than two days and has been in overfunding mode since then. Crowdcube referred to the round as the largest raise on a UK crowdfunding platform, as news provider Crowdfund Insider cited a company statement last week.
Initially, the offer was set at £5.0 million, but, according to the prospectus, this was the minimum amount intended to be raised. The company actually intended to raise up to £12 million by the issue of 41,067,762 shares of £0.2922 each. In addition, existing shareholders were allowed to offer up to a further 17,111,567 existing shares for sale in case of an excess of £12 million worth of demand.
The equities sold via the crowdfunding round equal 10.13% of the company’s capital. Prior to the financing round, Crowdcube was valuated at £65 million.
The raised proceeds, the company intends to use as following:
- £3.65 million in working capital to fund existing operations
- £0.75 million in expansion of technology team to support ongoing growth
- £0.4 million additional marketing budget for 2017
The company’s plans feature the addition of secondary liquidity for investors and the attraction of later stage businesses that have potential for faster returns, which would also increase its own liquidity and return on investment (ROI). It also intends to launch a series of new software products and services to enable businesses to manage their investors more efficiently and give investors greater transparency on how their investments are performing.
The company strategically announced the expansion of its FCA license when it launched the self-crowdfunding campaign, leading to quick overfunding. The company can now has regulatory permission to facilitate IPOs and to act as nominee, fund manager and investment advisor.
Crowdcube has a share of nearly 50% of the UK equity crowdfunding market and aims to cross that threshold to become the leading market player. In May 2015-April 2016 it had a market share 47% of UK equity crowdfunding market in terms of total raised. In Q1 2016, its market share slightly increased to 48%, the company said, citing independent third-part sources.
“Based on current market conditions we are currently anticipating ongoing annual revenue growth over the next three years driven by our product developments and our market leading position in a growing market. we currently expect revenues to reach breack-even by the end of 2018,” it said in the prospectus.
Crowdcube is one of the leading crowdfunding websites in the UK. It has helped start-up, early stage and growth businesses raise more than £184.6 million through equity and debt investment options. The website has nearly 300,000 registered investors. It is used by entrepreneurs to raise funding from their own network of friends, family, customers, as well as from strangers.