Crowdcube Crowdfunding Review 2019
Ratings, Pricing & Comparisons
Is Crowdcube the best Crowdfunding website for you?
With lower marketing costs and online technology which allows us to globally connect with customers, now is the perfect time to start up a new business.
However, there’s one issue…
Entrepreneurs need to raise investment funds to get started!
Well, don’t worry – there’s good news!
With the increase in online investment and crowdfunding sites of late – including Crowdcube – potential entrepreneurs are able to be placed right under the noses of those who hold the money.
Crowdcube was established by Luke Lang and Darren Westlake back in 2011 and is a British investment crowdfunding platform. It was actually founded in 2010 but wasn’t publicly launched until February 2011.
Its headquarters are located at the Innovation Centre of the University of Exeter as well as having a London office within Soho.
Crowdcube has successfully funded 172 businesses to the tune of £48m and has in excess of 120,000 registered investors as well as over 25 employees across both offices.
With so many crowdfunding platforms on the market, it can be difficult knowing which one to choose…
So, to help you make your mind, I have reviewed what exactly Crowdcube has to offer including what type of crowdfunding it is suited to. So, if you’re ready, lets dive in and get on with it!!
I will put Crowdcube through our rigorous testing and will look at the following aspects.
Performance:
How does Crowdcube perform and what features do they offer to help create the perfect crowdfunding campaign?
Usability:
Does Crowdcube offer everything necessary that users expect from a crowdfunding platform?
Support:
Does Crowdcube offer quick customer support solutions and help, and can users count on them when it matters most?
Cost:
Does Crowdcube offer the best pricing in the marketplace? And more importantly, what deals are available that can help users save money?
Performance
Crowdcube does what it says on the tin and enables users to create campaigns quickly and easily. It offers investor rewards, support documentation and much more.
Cost
There are no fees to invest or join Crowdcube, and they don’t take any money from returns that are made. Crowdcube charges a 5% charge when a campaign has been successfully completed and once the target has been reached £1,750 in legal fees will also apply.
Usability
Crowdcube is easy to use both for raising funds and investing. Investors are able to invest alongside venture capital firms which are in the early start-up stage or businesses that are in the growth date as well as professionals.
Support
Crowdcube offers lots of support and guidance from real people rather than automation. It also has a help center which outlines everything you need to know about investing and raising.
We Like
- Having direct shareholding
- No investment fees
- More likelihood of repeat funding
- They are well established and own approximately 50% of the UK market
- Platform offers loads of guidance and is easy to use
We Don't Like
- All or nothing model – if the target isn’t reached no monies are taken
- Not suitable for investors who are looking for a short-term gain
Introduction
Crowdcube provides access to over 300,000 investors and is an equity funding site whereby entrepreneurs are able to raise funds for upcoming projects.
Investors can choose how much they wish to invest, and the site attracts both corporate and private investors as well as venture capital speculators. Crowdcube promotes themselves as being the very first site of its kind and as its popularity grows it has more investment pumping into its projects than any of the other UK venture platforms.
The way that Crowdcube operates is on an all or nothing basis. What this means is that if the pitch reaches the investment goal, then the business will receive the funding, whereas if it doesn’t, then the monies will not be taken from the investors. Commission will be payable on all funding campaigns which are successful.
Crowdcube often uses social media to alert potential investors about upcoming offers. Investors are able to select which companies they want their money invested in and will receive a share of them while entrepreneurs are able to get their ideas of off the ground by setting up on the site to attract their funding.
#1 Ease of Use
If a crowdfunding site is difficult to use or understand, then the chances are that no-one will want to use it. A good way is by having a look at the startup process, if it’s tough to begin with then this most definitely is not a good sign.
To make things easier, I broke Crowdcube into two parts – investors and those raising funds and looked at how easy the startup process was for each.
So, without further ado, let’s see how it panned out…
Investors
Who can invest?
So, let’s begin with the basics. You must be over 18 years old AND be legally entitled to invest prior to considering investing on Crowdcube. Potential investors must be UK residents or in a country where they are legally able to receive financial promotions which are provided by Crowdcube.
Investment opportunities are not advertised by Crowdcube to those in Canada, Japan, and the USA or other countries where the advertising of their pitches is deemed unlawful.
Those registering on Crowdcube must confirm which of the four investors they are as well as completing a short questionnaire which outlines the high risk associated with early-stage businesses and start-ups.
The investing process…
Prior to investing, potential investors will need to register as members. Once a suitable pitch has been found, just punch in the amount that you wish to invest in the box labeled ‘enter amount’ then hit ‘invest now.’
Investment payment can be made via Crowdcube’s third-party payment provider – Stripe using either a credit, debit or prepaid card. Payment by bank transfer or cheque is not accepted. Payment will only be taken once the pitch has reached its target and investors are given 7 working days to review their investment and for legal documents to be completed. If a pitch fails to reach its target, then no monies will be taken.
Generally, minimum investments are not below £10.
Making Returns
If the company that you have chosen to invest in, ‘exit’s in the future then you will receive a return. There are various types of exits including IPO, share buyback and trade sales. Each company has different ones, so it is recommended to read the pitch page for all information.
Raising Funds
By choosing to raise on Crowdcube and engaging your network, revenue can be increased as well as customer advocacy, and brand loyalty improved. Crowdcube claims to have built the most powerful crowdfunding platform in the world, which has been designed to turn family, friends, customers, and fans into investors.
Campaign Success which is data driven
Crowdcube will provide its users with real-time campaign data when live. It also provides a daily performance on the pitch; what channels are impacting the most and how it is in comparison to other pitches.
Crowdcube has a data-driven approach which is both targeted and personalized and has been proven to fully maximize the impact of promotional activity by converting pitch visits to investments. Users will also have access to extremely effective tools with which to convert, manage and update investors.
So, the all-important question – is there a limit on how much can be raised?
Well, Crowdcubes minimum raise is £50,000, their average £670,000 and the largest… wait for it…. was for BrewDog which was a whopping £10 million.
Money can be raised from outside of the UK, subject to specific criteria and local regulations. If considering this, it would be necessary to be assessed by Crowdcube to ensure that it is suited to the business.
Finance can be raised on Crowdcube for a broad range of sectors including businesses in the early and growth stages as well as start-ups.
The below requirements are necessary in order to apply for Crowdcube:
- The business is either in the UK or Irish limited company NOT a Sole Trader or LLP
- The business is not involved with anything relating to property development, filmmaking/theatrical production or of a sexual nature
- The business holds an active and valid Companies House number
As part of the process of verification, Crowdcube also reviews:
- The company’s structure. If the business is comprised of a group structure, then the funds need to be raised for the top company
- Director financial and corporate history
- The existing shareholders as well as any majority institutional shareholders together with their investment terms
So, now you know a little bit more about how Crowdcube operates both for investors and raisers, let’s have a look at how easy the process is for raising funds with the 8 steps below…
1 Pitch Creation
Crowdcube’s process will ensure that creating a pitch page is easy, quick and effective.
2 Verification
As Crowdcube is a regulated platform, they will verify the pitch text to ensure that it is clear, fair and not misleading.
3 Pitch promotion planning
To increase the chances of successful funding, Crowdcube provides a whole heap of resources, tips, hints, and templates to help plan and effectively promote raises.
4 Private launch
Give exclusive access to your own pitch by opting to launch privately.
5 Public launch
When the pitch reaches 20%, launch publicly – this will mean that it will be live for 30 days. It is possible to arrange for extensions,
however, most pitches that reach their target do so within 22 days.
6 Reaching 75% of funding
When you reach this stage, Crowdcube will introduce their in-house legal team who then begin the legal checks in order to complete the round efficiently and quickly.
7 Fully funded
When the raise has been successfully funded you will be welcomed into Crowdcubes Funded Club.
8 Completion of the round
Crowdcube will take care of all the completion procedures including capturing payments, anti-money laundering investor checks and the issuing of share certificates.
Verdict – Crowdcube is easy to sign up to and straightforward to use for both investors and funders.
#2 Customer Support
One thing that I consider to be really important when testing and reviewing anything is what support is available and what shape and form it comes in. After all, we’re all human and need help at some time or another, and I want to know that when (not if!!) I need it, that it isn’t too far away.
In this section, we’ll have a look at exactly what help and support Crowdcube offers to both investors and raisers. So, if you’re ready, let’s dive straight in and get on with it…
Crowdcube does have a help center which explains how it works, how to raise finance as well as how to invest together with what opportunities are available.
By clicking on the ‘explore’ button, users will be taken to the featured article section which also includes all of Crowdcube’s latest news.
The help center page has various sub-headers which users are able to click on to help navigate them to the correct page in order to answer their question.
Crowdcube can also be contacted via email, telephone and by post.
Is there any support available during a raise?
Although Crowdcube has built their product to ensure that the raising process is as easy and quick as possible, there is additional support on offer if required. Crowdcube has a team of experts to hand and offer an array of FAQs, top tips and comprehensive guides. Users of Crowdcube, during their raise, will also have access to:
The Raising Finance Help Centre
This is where you will find informative guides that will provide the answers to many of the most asked questions.
Crowdfunding Partners
It can be challenging for any entrepreneur to prepare for a crowdfunding round, not to mention time-consuming. Crowdfunding Partners are specialized partners that can offer more hands-on support when starting a raise. They offer developed services which are designed specifically around businesses looking to raise via Crowdcube.
Verdict – Crowdcube offers various means of support including a help center which outlines most questions regarding raising finance and investing and can be contacted by email, post or telephone.
#3 Networking tools and features
It’s always a good idea to have a look at what social networking tools a crowdfunding site offers together with what reporting features are offered. As social networking is a crucial piece of crowdfunding, these features are essential. Also, does the crowdfunding site have an active community and more importantly one that is suited to your cause? If it hasn’t then you need to really ask yourself, what exactly are you getting from the platform fee?
So, how did Crowdcube stack up, well carry on reading and let’s find out…
Crowdcube has an active online community on social media sites such as Facebook and Twitter and also has access to specialized partners that can offer much more support for those looking to raise via Crowdcube. To make things easier and for the purpose of this review, I have listed these below:
IdeaSquares
IdeaSquares is made up of a team of experts who have helped many businesses to raise heaps of money via fundraising rounds using Crowdcube. They are UK based and have a vast knowledge coupled with tons of crowdfunding experience and can help via training sessions, one to one phone calls or by their online projects.
Raising Partners
Raising Partners is similar to having an extension to your team and will basically run the crowdfunding campaign which will, in turn, leave more time for funders to run their business.
The team is fully experienced in raising investment and know the requirements in managing a crowdfunding round. They work together with the companies to ensure that they are investor ready by creating production-ready video scripts to ensure that the company’s story is told in a clear and compelling way and pitch decks which are put together in such a way that the crowd and investors will love.
Tribe First
Tribe First offers PR services together with extensive marketing and is an agency which is hands-on. They help businesses to create buzzes around both their crowdfunding raises and brands. The Tribe First team help to showcase investment and business opportunities to the appropriate audiences via national or international PR and marketing campaigns.
G by Grant Thornton
This company provides one-to-one bespoke support and can assist in the creation of a platform ready, fully compliant pitch page. The team members can also help by reviewing any supporting documentation such as forecasts, business plans, and video pitches.
Another great tool that Crowdcube offers is to provide its supported businesses access to new reporting sorting software.
The recent acquisition of the software provider ‘Supdate’ means that any Crowdcube funded business will be able to use both the platform as well as other benefits, post funding such as having access to Amazon’s Launchpad Programme, which will ensure that they fully benefit from the crowdfunded raise. Crowdcube’s chief executor and co-founder emphasized the importance of ensuring that businesses were able to connect easily with their shareholders to enable them to stay regularly updated and stated that ‘it was obvious that Supdate would be a natural fit for Crowdcube and our growing Funded Club.‘
Verdict – Crowdcube has an active online community on social media sites as well as access to specialized partners that can offer funders much more support and access to many more tools in order to enhance their raise.
#4 Platform Fees
Platform fees are when a crowdfunding site takes an amount or percentage of the monies raised for either yourself or your cause; I guess its sort of paying for the privilege of actually using the platform. These fees can range from anywhere between 5-12%.
Be careful though, as some fees can increase if the goal isn’t met, while others, such as
To make things easier and for the benefit of this review, illustrated below are the fees and terms for Indiegogo’s crowdfunding campaigns:
Crowdcube offers an ‘all or nothing’ model which means that if the expected goal isn’t reached then no funds are received at all.
So, how expensive is Crowdcube or is it as cheap as chips? Let’s dive straight in and find out…
One of the great things about Crowdcube is that they do not charge a listing fee for businesses, they do, however, charge a 7% ‘success fee’ (excluding VAT) which only applies once the target has been met.
A completion fee is payable which is generally around 0.75 – 1.25% of the funds raised and includes the variable costs of Crowdcubes third-party payment providers as well as the cost of collecting the funds, reconciliation, and distribution.
The third-party payment provider’s variable charges are as follows:
Debit Cards
- 0.47% for UK debit cards
- 0.47% for EU debit cards
- 2.9% for non-EU debit cards
Credit Cards
- 1.4% for EU Visa and MasterCard credit cards
- 2.9% for non-EU and Amex credit cards
Verdict – Crowdcube is very reasonable when it comes to fee platforms and what makes it even sweeter is that they don’t charge a listing fee for businesses – nice one Crowdcube!!
Is Crowdcube the right crowdfunding platform for you?
Of course, Crowdcube won’t be the correct crowdfunding platform for everyone, so let’s try to get down to who precisely this platform is best suited to.
Budget
Crowdcube can be used for those on a budget as the fees are pretty much in line with most other platforms. However, if the raise is for a non-profit, then it might be better to consider using a different platform such as Indiegogo who offer free fundraising.
Beginners
Crowdcube is perfect for beginners as it provides a platform for early and growth stage businesses as well as start-ups to enable them to raise finances from a range of professionals and entrepreneurs including investors, VC firms, high-net worth’s as well as everyday investors for any type of business.
High-Level
Crowdcube can be used for high-level funding; however, people seeking this high level might be better looking at platforms such as Crowdfunder which is solely designed around ‘high impact’ ventures.
Summary
Well, that’s it I’m now nearing towards the end of this review, and I hope that it has given you an overall idea what Crowdcube is about and what if has to offer. I’m guessing though that the final and most important question is – Is CrowdcubeTHE ONE, I mean the right platform for YOU and your funding?
So, Crowdcube is the only crowdfunding service that enables businesses to raise funds for equity return – which makes it pretty unique.
Thanks to crowd backing, loads of businesses funded by Crowdcube have gone onto to greater things.
Many companies have been able to receive a follow-on investment; others are still expanding and growing both in the UK and overseas while others have gone one step further and have already both exited and delivered their investors returns.
Crowdcube really is a solid way to build up a portfolio of private businesses and is an extremely solid platform. Their signing up process is simple as is investing. It can all be done online and is straightforward. Once you have signed up, its simply a matter of browsing through and seeing which one is the right one.
Crowdcube has an impressive variety of business offerings and is definitely a platform that needs to be considered for those thinking about diversifying their portfolio to include start-ups and private businesses.
From international expansion to the first exit, Crowdcube offers businesses constant support so that they are able to grow from strength to strength.
Disclaimer
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Now, over to you...
Now I’d love to hear from you:
Are you still unsure of which crowdfunding website is best for you?
Maybe you’ve tried Crowdcube before and would like to tell us about it?
Leave any comments below and I will be sure to answer as soon as they come in!
