- World’s leading investment Equity crowdfunding platform
- Also offers ‘mini-bonds’ lending
- Aimed at entrepreneurs, start-ups and early stage enterprise
- Offers pension and investment schemes
- Available in UK and Spain
- Regulated by FSA (Financial Services Authority)
Crowdcube is the world’s leading equity investment crowdfunding platform which was established in 2011 as an equity crowdfunding platform that allowed people the chance to buy equity in unlisted UK registered businesses in exchange for their investment. From June 2014, Crowdcube offered investors two types of investment opportunities, equity and mini-bonds (lending money). Crowdcube currently takes projects from Spain and UK…
Equity crowdfunding facilitates an opportunity to raise investment in exchange for an equity stake in the business by harnessing the power of the crowd. It is typically offered by start-up, early stage and growth business, including the following features: EIS (Enterprise Investment Scheme) and SEIS (Seed Enterprise Investment Scheme) tax breaks for investors; No interest repayments; No up-front fees.
On the other hand, Mini-bonds allow members of the public to lend money to the issuing company in return for interest or rewards. Mini-bonds have “particular appeal for established businesses”. The Mini-Bonds option or opportunity can be summarised by the following features: Investment in exchange for regular interest repayments; Lump sum repaid at the end of the term.
In February 2013, Crowdcube became authorised by the Financial Services Authority (FSA) making Crowdcube the second regulated equity crowdfunding platform in the UK (after Seedrs) to allow investors to become direct legal shareholders in UK businesses.
The Crowdcube process can take three to four months to complete and the whole process can be explained through the following 11 main phases:
- Pitching the application: Once the applicant completes the Pitch Application process, providing information including their three year financial forecasts, business plan and a summary of the investment opportunity, it undergoes the assessment process.
- Pitching creation: Once the application is approved, the applicant shall start creating his/her pitch page, including a video and getting financial documents approved. It is recommended to have a marketing plan in place before your project goes live.
- Pitch activation: Once the pitch goes online, investors can then say how much they’re willing to invest and over a period of 45 days, investments accumulate until the target amount is reached.
- Pitch funded: Once the target is reached, the pitch is closed and marked as funded.
- Articles of Association: CrowdCube will keep working with the applicant for the completion of the fundraising and to agree and adopt new Articles of Association to integrate the new and old shareholders as well as to confirm the share figures and agree on the investment schedule.
- Seven day email: Investors are emailed to confirm their investment and review the articles and will have seven working days to review everything. Once the seven working days have passed the investment will become a binding order for investment in the company.
- Anti-Money Laundering (AML) checks completed: CrowdCube will conduct in-depth AML and background checks on each and every investor and entrepreneur to ensure all parties are protected.
- Resolution and board meeting: If required, the ‘Waiver of Pre-emption Rights’ and ‘Board Resolution’ documents provided to the applicant will be signed by the relevant investors and board of directors and reviewed by Crowdcube. The applicant needs to ensure that 75% of the shareholders sign the special shareholders resolution.
- Funds captured & transferred to you: CrowdCube instigate the capture of the funds from the investors via the payment providers that the applicant has chosen. After removing the payment provider, fees and the commission, the net funds are transferred to the applicant. This part of the process usually takes 5-10 working days. Legal and admin fee will be invoiced at the end of the process and is not deducted from the investment amounts.
- Investor schedule draft: It is important that a share calculation is carried out at this stage so that Crowdcube will confirm the number of shares to be issued to the new shareholders (taking current shareholders into account) and draw up the investor schedule.
- Share Certificates generated and issued: Crowdcube will issue share certificates on the applicant’s behalf and the funding process is completed.
Crowdcube and its pricing policy can be characterised by the following principle:
- Membership fee and Pitch listing fee: FREE. Fees are only incurred upon reaching target.
- Success fee: 6.5% (VAT exempt) of total funds processed
- Administration: £1,250 (ex. VAT) which covers EIS/SEIS filing (as applicable), communication with investors, drawdown of investor funds and issue of digital share certificates via crowdcube.com
- Corporate services: £1,250 (ex. VAT) assistance with preparation of corporate resolutions, adoption of standard articles of association and other documentation, liaising with an investee’s solicitors to implement compatible documentation following the successful fundraising of a Pitch. This amount applies whether or not Investee uses its own legal advisers for completion of the fundraising.
- Payment Processing Fees. The Payment Processing Fees are deducted by the payment provider (Stripe) when the raised funds are transferred to the Entrepreneur. Fees are based on which country the payment card is registered in and are 0.5% for UK, 1% for Europe and 2.9% for ROW.
- Additional equity services provided: Crowdcube offers an enhanced EIS/SEIS service, from £350 (ex. VAT)
- Financial Forecasting from £1,200 (ex. VAT)