Crowdcube: The Rise of Equity Crowdfunding

Crowdcube is a crowdfunding platform that allows people to invest in start-ups and small businesses in exchange for equity.

Founded in 2011 by Darren Westlake and Luke Lang and headquartered in the UK, it has raised more than £200 million from 400,000-plus investors.

What is Crowdcube?

Crowdcube allows businesses to raise money by selling equity stakes to investors. They can choose to invest as little as £10 and receive equity in the company in return. Equity crowdfunding is a relatively new way of raising money, and Crowdcube is one of the leading platforms in the space.

It has helped several businesses raise money, including Bulb Energy, Revolut, and Monzo.

How does it work?

Companies looking to raise money on Crowdcube create a profile and a funding campaign. Potential investors can browse these campaigns and decide if they want to invest.

If an investor decides to proceed, they will enter into a contract with the company. This contract will specify how much equity the investor will receive in exchange for their investment. The equity that investors receive can be sold or transferred at any time. However, it may be subject to certain restrictions, such as a lock-up period.

Crowdcube takes a percentage of the money raised as a fee. This fee is typically 5% of the total amount raised. Crowdcube is a popular choice for companies looking to raise funds through equity crowdfunding. It has a large community of investors and a streamlined process for creating and funding campaigns.

Benefits of investing through Crowdcube

Here are three benefits of investing through Crowdcube:

You can diversify your portfolio.

Crowdcube offers the opportunity to a wide range of businesses, from early-stage start-ups to established companies. This means you can spread your risk by investing in many different businesses rather than putting all your eggs in one basket.

You can get involved with businesses about which you're passionate.

Crowdcube gives you a chance to invest in businesses that you believe in and that align with your values. This way, you can make money while supporting businesses about which you're passionate.

You can get access to exclusive deals.

Crowdcube offers exclusive deals to its members, which means you can get access to investment opportunities that aren't available to the general public. You can secure a place on the ground floor of businesses with high growth potential.

Risks of investing through Crowdcube

• Lack of diversification: When you invest in a single company through Crowdcube, you put all your eggs in one basket. This can be risky, as the company's success or failure will directly impact your investment. If the company you invest in fails, you could lose all your money.

• Illiquidity: Crowdcube investments are not liquid, so you cannot sell your shares easily or quickly. If you want to access your money before the company is sold or goes public, you may have to wait a long time or take a significant loss.

• Lack of regulation: Crowdcube is not subject to the same regulations as the stock market. This means there is a higher risk of fraud, and investments may be less secure.

• Early-stage companies: The companies that list on Crowdcube are typically early-stage and have a higher risk of failure. You should carefully research any company before investing, as there is a good chance you could lose your money.

If you are considering this, it is essential to know the risks involved. While there are potential rewards, there is also a significant risk.

How to invest through Crowdcube

The average investment on Crowdcube is £1,000. Equity crowdfunding is a new way of investing that has only become possible in recent years. It allows you to make investments in early-stage companies and start-ups in return for equity.

This means you own a piece of the company and are entitled to a share of the profits if the company does well. It has funded 400-plus companies and raised more than £200 million since it was founded in 2010.

The process of investing is straightforward. First, you need to create an account on the website. This is free and only takes a few minutes.

After creating an account, you can browse the different opportunities. You can filter these by sector, stage of funding, and other criteria. Once you have found an investment opportunity that you are interested in, you can view more information about the company and the investment.

You will also see how much money has already been invested and how much the company is looking to raise. Once you have decided that you want to invest, you can do so with a few clicks.

You must provide your payment details and agree to the terms and conditions. Once you have invested, you will become a shareholder in the company. You can view all the information about your investment, including the share price, on your account.