Crowdcube, despite some industry criticism, has persisted with its all-embracing model. You can invest as little as £10 and, as a business raise, as little as £10,000. It’s the Lidl or Aldi of equity crowdfunding and as such fulfils a need for start-ups in the retail sector – baring a few larger companies who have used it. Whether it will ever return any money to investors is the question. The answer to date is no.
Newer insurgents have chosen a very different route – as different, in fact, as the often wrongly-compared peer-to-peer lending platforms. These newer platforms look at growth companies, ones that are scalable and, more often than not, in revenue rather than pre-revenue. These platforms are run by professionals from the banking and private equity sectors. Businesses raising money on these platforms have to be looking for in excess of £300k and are more often in the £1m to £2m range. Investors tend to be HNW individuals, angels or VCs, or a mix of all three. The minimum investment level is often over £1,000. This is not for the Lidl style punter. And it might be claimed it’s not really crowdfunding at all…
So, is there any crossover?
Well, currently, there doesn’t seem to be. Talking to the latter category, it’s clear that they really do not want the Lidl and Aldi shoppers. So this leaves these investment shoppers, The Crowd, with a one way choice for now – Crowdcube or Seedrs or nothing.
Interestingly, what Crowdcube has achieved that these new platforms have not yet, is traction. If investors don’t start to see a return at some stage though, you have to wonder if the tread might start wearing a little thin…
Is there room for a platform that embraces both? Well, I think there is, but its model is a tough nut to crack. Like all tough nuts, the rewards could be plentiful.