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Equity Crowdfunding Data and Insight: A Chat with the CEO of Crowdcube, Darren Westlake

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Crowdfunding Works is a series of interviews with CEOs of major investment crowdfunding platforms worldwide. The intent is to learn from their experiences, data, and insight. This can help shape our understanding, and expectations, around the advent of security crowdfunding in the United States. And, fingers crossed, I hope our regulators take note of these proof points: a democratized private market, companies funded, jobs created — and zero fraud.

Darren Westlake, CEO of Crowdcube was kind enough to sit down with me and walk through Crowdcube’s model, and what he and his team have learned since launching in July 2010. The full interview can be found here. Only my camera picked up, I apologize beforehand for having to stare at me the whole time. As you’ll notice, I’m new at interviewing : )

A serial entrepreneur, Darren teamed up with marketing guru, Luke Lang, to launch Crowdcube. It was the first equity crowdfunding platform to launch in the UK, and really the first of its kind globally, charging fees only when a raise is successful. Crowdcube was also the first investment crowdfunding company to raise its seed round on its own platform, a choice that was equally philosophical as financial. We’ve seen many other investment crowdfunding platforms follow this path, and I’m sure we’ll see many more.

 Opposed to drawing this out, I figured I’d just let the data speak for itself:

  • General
    • Crowdcube was founded in July 2010
    • Equity crowdfunding platform for growth startups, as well as traditional small businesses
    • All “non-accredited” investors must pass a quiz on the risks of private equity investing
    • 29 companies funded since inception; $6.8 million crowdfunded to date
    • Average crowdfunded raise on Crowdcube’s platform: $234,000
    • Average (mean) equity offered: ~18%
    • Recently piloted an offline incubator that fed into Crowdcube’s platform: 10 startups entered and 8 pitched on Crowdcube. It went very well, they’re going to continue iterating this offline-to-online model.
  • Businesses 
    • Free to list — must be approved first (can re-apply)
    • Crowdcube provides feedback and services to help businesses with the application
    • Approval Rate: ~25%; Success Rate: 10%; Fully-Baked Success Rate: 2.5%
    • Maximum raise duration: 60 days (was originally 6-months but the team learned this was too long)
    • Wide range of businesses served, from seed to established. Concentration, to date, in Consumer Products and Food & Beverage
  • Investors
    • Democratized: all investors can participate, both accredited and non-accredited
    • Minimum investment size: $16; Maximum: $160,000
    • Average number of investors: ~73
    • Average size of investment: ~$2,900
  • Crowdcube’s Business Model 
    •  Crowdfunding Revenue
      • Zero application fee
      • Success fee of ~5% of funds raised
      • Affiliate revenue on value-added services provided to businesses  
    • Partnership Program
      • White-labels its technology and processes to partners
      • Partners have deal-flow; crowdcube has the platform
      • 25 partners today (currently only in the UK); waiting to see how regulations unravel before making a decision to service the U.S. market
  • Additional Resources

About Jonathan Sandlund

Founder, TheCrowdCafe

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