Crowdcube recognised as market leader raising double its nearest competitor.
Crowdfunded businesses outperforming traditional performance benchmarks.
Multiple exits and significant follow on investment for crowdfunded ventures deliver an internal rate of return of 8.55%.
Tuesday 8 November 2016 – London, UK. Following a report from AltFi into the status of businesses that have raised finance using equity crowdfunding in the UK, Crowdcube co-founder Luke Lang called for the industry to back recommendations for a common set of rules and principles for measuring the performance of crowdfunded businesses.
“As the crowdfunding industry matures, we need a unified approach to reporting on the performance of crowdfunded businesses,” claimed Lang. “AltFi’s independent and thorough analysis of the UK’s crowd portfolio is certainly a positive step for the industry and one we wholeheartedly endorse. Increased transparency of the due diligence process and ongoing performance of investments is critical for our maturing industry and investor confidence.”
Commenting on the report, Rupert Taylor, Founder of AltFi Data said: “Disclosure that encourages scrutiny of asset performance is in the interests of both platforms and investors. It allows investors to appraise historic returns. In turn it allows platforms to create trust amongst investors and confidence amongst issuers. This combination should encourage a more widespread adoption of the asset class.”
Crowdcube stood out in the report as a clear market leader in terms of capital raised from crowd investors in the last year with 46% market share and £71 million invested through the platform, more than twice as much as its nearest competitor (Seedrs). The pioneering platform also claimed three out of the five industry exits – AB InBev’s acquisition of Camden Town Brewery and Europcar’s acquisition of E-Car Club last year, as well as the sale of Wool and the Gang to BlueGem Capital Partners. Combined with bond interest repayments these exits have delivered returns in excess of £5 million to investors on Crowdcube.
The report also claims an average industry rate of return for investors of 8.55%. When taking into account the tax reliefs that are available for crowdfunding investors this figure jumps up to 19.14%, showing that equity crowdfunding investments have the potential to outperform the market.
Lang said “Crowdcube has already delivered financial returns to investors; with three of the five exits highlighted in the report coming from businesses, like Camden Town Brewery, to raise on Crowdcube. In the form of exits, follow on rounds on funding and businesses showing no signs of distress, we’re seeing success for 9 out of 10 companies to fund on Crowdcube, bucking the high failure rates often reported among early-stage businesses.
Lang believes that the increasingly diverse range of businesses to seek finance on crowdfunding platforms can no longer be compared with other industry figures on SME failure rates: “Crowdcube has a proven track record of providing investors with a broad range of investment opportunities from startups to established and VC-backed businesses such as Sugru, BrewDog and goHenry.”