Crowdcube Matches Small Businesses with Equity Investment
Limited companies seeking equity finance can attract investment by posting a video pitch online, following the launch of website Crowdcube.
Crowdcube allows any UK adult to invest as little as £10 in businesses in return for a small equity stake. Small companies which want to pitch for investment on the site can register for free for a limited period.
However, they must be seeking a minimum investment of £5,000 to be listed on the website. Crowdcube will charge businesses a 5% “success fee” when they hit their investment target. If a business doesn’t reach its target investment, the money is returned to the investors.
The website claims to be the first to offer equity and shares in return for investment from ordinary people.
“Most of the venture capital and angel networks require sophisticated investors or a high-net worth individual with lots of experience, but we’re opening it up to all those people who watch Dragons’ Den and would like to invest in good business ideas.”
said Crowdcube spokesman, Luke Lang.
“The businesses benefit because they don’t have to rely on one person giving them a large amount of money. On Crowdcube, you can promote your idea to your friends, family and colleagues online, generate excitement, get them involved in your business and ask them to spread the word.”
Businesses are required to register and complete a form explaining their idea to the Crowdcube founders and stating their target and the equity — or percentage of the business — they will offer if they reach the target. If they are accepted, they can create a Dragons’ Den-style video pitch which will appear on the website.