Established in 2011, Crowdcube is the world’s first and Britain’s biggest crowdfunding platform providing companies with alternative funding means. Crowdcube has raised close to £140million from nearly 250,000 investors. In its five years of trading, the company has grown from strength to strength – only days ago its co-founders Luke Lang and Darren Westlake were among Business Insider’s Coolest People in UK tech. Lang was also named one of the most influential people in peer-to-peer lending and crowdfunding on social media by City A.M. So it was an absolute pleasure and honour to sit down with Mr Lang himself for an information chat about alternative finance and Crowdcube.
Where does the idea of crowdfunding stem from?
The idea comes from a determination to disrupt and democratise investment and funding. At the time, Angel investing was limited to a small number of well-connected and wealthy individuals. We wanted businesses to be less reliant on angel investors and give them an alternative way to get their business funded.
Can anyone become an investor on Crowdcube?
There are some restrictions for instance, investors must be over 18 and you must complete a risk assessment to prove to us that you understand the risks associated with investing in early stage companies. Everyday investors must also commit to investing no more than 10% of their investable assets whereas self-certified sophisticated, high net work or advised investors do not have this restriction. Around 55% of investment in 2015 came from high-net worth, highly sophisticated and connected individuals.
Crowdcube offers two types of investments: equity and bonds – do you have any plan to diversify your product range?
Businesses funding requirements are broad and complex and with the equity investment market in the UK worth an impressive £3bn there are plenty of opportunities for us to expand our product range and cater for more funding requirements.
Do you have any restrictions on companies trying to raise funds?
We carry out in-depth assessments of all businesses approaching us for funding. Irrespective of the amount these companies are raising from £40K to £3.8m, we scrutinise these companies and always make sure that their pitch is fair, clear and not misleading. So if for instance there are claims of intellectual property, we check those and ensure the information is correct.
What are the challenges in Alternative Finance?
The FCA have done an exceptional job of introducing bespoke regulations for alternative finance that have allowed emerging markets, like crowdfunding, to flourish and make a real different to the UK economy enabling British businesses to expand, open new office, launch new products, export overseas. We hope to raise £150m in 2016 that is our target.
From challenges in alternative finance to entrepreneurial challenges, what advice would you give to people who want to start their own business?
There has never been a better time to start a business, especially with incubators, accelerators and co-working spaces available nowadays. Social media is also a great tool to build momentum. It is easy to start a business but a little trickier to stand out from the crowd. It is very important for people willing to start their own business to assess the market, get out there and get their proof of concept right.
Digital transformation relies on either embedding entrepreneurial energy within traditional businesses – what is your take?
Entrepreneurialism is the core value of Crowdcube, it is in our DNA. Embedding entrepreneurial energy can only be beneficial to big firms. We in turn feel extremely lucky and privileged to have worked and continue to work with Entrepreneurs.