Finance Darren Westlake · 9 November 2015
The backing of the crowd What has crowdfunding done for great British businesses?
We see a lot of column inches about crowdfunding, and why many companies are turning to the crowd as apreferred route to raising finance. But we seldom hear about what happens to those businesses post funding and, more importantly, what that investment has helped each to achieve. As Ive discussed in a previousarticle, around 85 per cent of businesses that apply to Crowdcube do not meet our stringent requirements to make it onto the platform. For those that do, over half go on to reach the investment target after successfully inspiring investment from our crowd of over 220, 000 people. And with nearly 60 per cent of the amount raised on Crowdcube coming from high-net worth and sophisticated investors, with a keen interest in the businesses they help fund, each company really has to make the money work to ensure plans and ambitions for growth are delivered. Weve completed over 315 successful raises on Crowdcube, with more than 115m having been invested through the site. Weve seen businesses go on to do amazing things with that investment, which is all thanks to the backing of the crowd. The first business that comes to mind is E-Car Club, which delivered the first complete exit for crowd investors earlier this year, following its sale to Europcar in July. E-Car Club the UK’s first entirely electric car sharing club for businesses and communities became a milestone in crowdfunding history as the first crowdfunded exit after raising 112, 000 from 63 investors on Crowdcube. The business was able to leverage the social proof of their crowdfunding efforts to raise yet more money. The founder of E-Car Club, Andrew Wordsworth, is still part of the business and his plans include having hundreds of vehicles deployed over the next 3-5 years. But he is also MD of Sustainable Ventures Development Partners, a UK accelerator for low carbon and sustainable businesses, which also recently raised money on Crowdcube for Powervault, a domestic electricity storage device. it’s interesting that while Wordsworth is proud that the E-Car Club exit was a watershed moment for crowdfunding, he feels more pleasure from just being able to repay his investors? trust by investing in the business in the first place! Over the last few years, weve seen some fantastic success stories that will hopefully inspire businesses and investors alike. One is Gem Misa, who successfully crowdfunded two of her businesses on Crowdcube Righteous and CaulI Rice. Today, Righteous has been valued at more than 3.5m and is stocked in more than 1, 000 stores in the UK and overseas. CaulI Rice is no less impressive, making it to the finals of Richard Branson’s Pitch to Rich 2015 campaign. Another inspiration is Pippa Murray, who raised 120, 000 on Crowdcube last year for her startup, Pip & Nut. Like many young entrepreneurs, Murray had to cut costs in the early days and spent three months living in a shed in order to save money and get her nut butters off the ground. Following investment from the crowd, Pip & Nut is now stocked in leading retailers, including Selfridges, As Nature Intended and Booths. The founder of SilkFred, Emma Watkinson funded the ecommerce platform for independent fashion designers in 2013. Since then, she has been invited to Vogue Fashion Experience in Dubai, sailed past the 1m mark for 2014 sales, and been nominated for UKBAA Best Female Led Investment. Others have used their investment to focus on expanding overseas. One such business is East End Manufacturing. The company champions clothing that is “Made in Britain”, and was the first clothes factory to open in London’s East End for many years. It initially raised 150, 000 in 2013, via Crowdcube, to fund a move to new premises. Founder Barry Laden then returned to crowdfunding to finance the company’s international expansion, raising a further 250, 000. Today, the business sells its own brand fashions in 240 countries through Asos.com.
ABOUT THE EXPERTDarren Westlake
Darren Westlake is the co-founder and CEO of Crowdcube, an online platform that enables startup, early and growth-stage businesses, from a range of sectors, to raise finance with the added benefit of being backed by the crowd.