Crowdcube Authorised by FSA
Crowdcube, the innovative crowdfunding platform, has just become authorised by the Financial Standards Authority (FSA).
The FSA authorisation allows Crowdcube users to become direct shareholders in UK businesses and offers additional investor protection.
Crowdcube users will now be able to have access to independent experts from the Financial Ombudsman Service (FOS) and will also be able to claim compensation from the Financial Services Compensation Scheme (FSCS) if so needed.
The crowdfunding platform, launched in 2011 by co-founders Darren Westlake and Luke Lang, has raised over £5 million for entrepreneurs.
The equity based model sees businesses pitch for funds directly to the crowd where micro investors can invest as little as £10.
The "all or nothing" approach means that entrepreneurs pitch for a certain amount of funding in return for an equity stake in their business. If the business fails to raise all the funds then the money is returned to the investors.
The latest FSA approval should add further confidence to the crowd, knowing that their money is in a regulated scheme and that they are protected should they need it.
Notable successes on CrowdCube include The London Distillery Company, who raised £250,000 last year, alongside artisan bakery, The Thoughtful Bread Company, who raised £55,000 in just 11 days, and botanical drinks firm Kammerlings, who successfully received £325,000 form 69 investors just before Christmas.
Darren Westlake, the co-founder and CEO of Crowdcube had this to say:
“We’re delighted to be the first authorised crowdfunding platform that allows investors to become direct shareholders in UK businesses. Our authorisation and the additional investor protection it affords will increase satisfaction and confidence, which is at the heart of our business and will be crucial to our long term success in the UK.”
Looking to the year ahead, Westlake added:
“In the last two years we have pioneered and led the equity crowdfunding market which is set to boom in 2013 and beyond. We want to continue to be first choice for entrepreneurs seeking equity finance and for people looking to invest in start-up and early stage businesses in the UK.”
The Rt Hon the Lord Young, advisor to Prime Minister David Cameron on Enterprise, authored a 2012 Government report entitled Make Business Your Business – Supporting the start-up and development of small businesses in which he advocated crowdfunding. Lord Young said of the latest developments at CrowdCube:
“Crowdfunding is a highly innovative and important source of finance for UK businesses. I am delighted to see that the UK financial services industry and its regulators are reacting dynamically to new models of business finance, such as equity crowdfunding, so that the UK can maintain its position as world leaders in this space.”
Lord Young’s report was the first to focus on SMEs since the Bolton Report of 1971.