Has Crowdfunding Finally hit the Big Time?
How do we know that equity Crowdfunding has finally arrived on the scene?….well Crowdcube have just raised £1.5m, through their own Crowdfunding platform, in just three days from just over 250 investors. The investment, which sets a new world record for funds raised via an equity crowdfunding platform, will be used to fuel Crowdcube’s next phase of growth.This comes on the back of FSA approval meaning investors using Crowdcube will now be able to claim compensation from the Financial Services Compensation Scheme and access the Financial Ombudsman Service if they have a complaint, giving people have that confidence of the additional protection they’ll get as a result.
Crowdcube has helped 36 small businesses raise a combined £5m since it was founded two years ago. Consumers can back small businesses by buying stakes with as little as £10.
For small businesses, selling shares through crowdfunding remains a very niche activity, but it is an option that is growing in popularity.
Seedrs, another UK crowdfunding website, is already authorised by the FSA, but it does not facilitate direct investment in small businesses. Instead, it holds shares in a company as a nominee and manages them on investors’ behalf.
It is obvious the UK’s 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.