AMA with Luke Lang, Crowdcube Co-founder and CMO

Investing and Markets 📈 Startups Crowdfunding 🔨
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UPDATE: Luke will be back from his paternity leave and do this AMA at 10 AM on Friday, 20th March! :clock10: :eyes:

Post your questions below! :pray:

We’re excited to restart our AMA series with a face that may be familiar to a lot of Freetraders.

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About Luke:

Luke Lang is co-founder and CMO of Crowdcube, a pioneer and leader of the equity crowdfunding industry.

Luke regularly provides comment to the global media on entrepreneurship and industry trends and has been named by Debrett’s as one of Britain’s 500 most influential people and was selected as one of The Sunday Times ‘Maserati 100’ game-changing entrepreneurs.

Since launching Crowdcube in 2011 with co-founder Darren Westlake, Crowdcube has been recognised as the preferred funding option for today’s startups and later-stage businesses.

Over 1000 campaigns, including Monzo, BrewDog, Pod Point, Freetrade, Pip & Nut, Mindful Chef, Mr & Mrs Smith and Grind, have successfully raised funds. More than 900,000 registered Crowdcube members have invested £800 million on the platform in nine years.

Today, Luke is driving the company’s ambition to fuel a new generation of businesses who want to leave their mark on the world.

Add your questions on the thread below, and Luke will be here to answer them at 10 am on Friday 28 February.

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  • Which is your favourite startup after Freetrade?
  • One thing you love and one thing you hate about being an entrepreneur?
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Hi Luke!

Thanks for stepping up for an AMA. I am both a CrowdCube & FreeTrade investor & customer, and appreciate your engagement here.

  1. I just finished preparing my UK taxes for 2018/2019. I found it astonishing how difficult CrowdCube makes it to find tax information and documentation (EIS & SEIS forms). It falls far short of the excellent consolidated view that Seedrs makes available. Could you please commit to closing this product gap by EOY 2020?
  2. Why don’t you provide aggregate views on companies that raise multiple times on your platform? I have participated in multiple freetrade rounds, for example, and have to revisit content/docs/discussions in separate difficult-to-find areas of your website. Do you think this is a reasonable customer experience?
  3. Have you considered usability studies of your web & mobile products? You make on-boarding and investment easy, but everything after that is a bit of a horror. Maybe create a product advisory panel from your users?
  4. Your website lists a CrowdCube-funded company failure rate of 15% from 2011-2018. Do you have stats from 2019 yet? It seems to me, both from personal experience and discussions on this FT forum, that this failure rate is accelerating. Could you please comment?
  5. Many of the companies who have crowdfunded on CrowdCube are great at community engagement and transparency during the funding process, and then often disappear and become opaque afterwards. It’s frustrating as an investor to see this happen. What can you do to ensure companies maintain at least quarterly updates? IMO you should consider holding-back some of the funds or offer benefits to good actors.
  6. What are your plans for a secondary market, if any?
  7. Which companies who have funded on your platform have you personally invested in?

Cheers,

jstar88

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Why did you start Crowdcube?

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How much of a role does Crowdcube have after a business has funded? I generally don’t see that much engagement from Crowdcube to represent investor’s interests & it seems like you are just focused on getting the business over the line with the funding and then leave them to it. E.g. Recently PodPoint has sold out within a couple of months of 2017 investors being eligible for EIS - I haven’t seen any evidence of Crowdcube working on investors behalf to influence the timing there. Do you think Seedrs model encourages longer term engagement as they take payment based on the return to investors as well?

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When will Crowdcube offer a secondary market like Seedrs does?
(Sorry if it was asked before)

Thanks!

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Crowdcube or Seedrs? :slight_smile:

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More recent raises I have had access to EIS certificates in digital form from the portfolio page. I do agree this used to be a massive pain with the paper form though.

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+1 on secondary market. I’m beginning to worry the lack of a secondary market is a material limiting factor to my future investments through CC.

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Seedrs have managed it, and CC had announced it but it’s all gone quiet. So what’s CC doing about it ?

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  1. secondary market - is there high level timeline/roadmap for this?
  2. selling nominee shares - Why there is no transparent pricing around same? Even something like £20 per transaction, etc. Currently there is no more information apart from administrative charges which will be confirmed by nominee team case by case basis.
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Hi, i’m the dude the awesome Shaun Sharkey introduced to you via email - , shame our schedules clashed around meeting, but thank you for taking the time to chat, i appreciate it :slight_smile:

Thank you also for doing this AMA! I want to say congrats on a record quarter @Crowdcube ;I’m especially astounded by your success internationally :star_struck: On a more personal note, congratulations again on the baby! :baby:

So, here are my questions:

Where do you see the future of equity crowdfunding/crowdcube?
Personally, I’m excited for a world of consumer-owned private companies, not just startups but also large, established businessees (Nando’s being my go-to example!).

Where do your hopes and/or predictions sit? Do you think it will always be predominantly startups/scaleups? Pan-european? Global?

When will your next crowdfunding round be? :slight_smile:

Are there any exciting campaigns coming up on the platform soon that you’re able to share? Even just a tease? :wink:

What businesses did you almost get to crowdfund? I nearly fell off my chair when I read Deliveroo were this close to crowdfunding with you in the early days. Satchel (an edtech startup backed by passion capital (1st monzo investors) for those that don’t know) is another campaign that seemed to call things off , but whilst the campaign was already (private) live, to my dissapointment.

I was wondering if you had any other stories like this? Or even if you could shed more light on the deliveroo story? It sounds really interesting!

Does Seedrs worry you? Notable clients have churned to Seedrs (Much Better Adventures, Innis and Gunn, Oval Money, Farmdrop (kind of), etc). Having spoke to these businesses, they’ve cited UX/platform engineering (e.g. secondary market) as their main reason for using Seedrs. As a crowdcube shareholder, this worries me I must say! I was wondering how worried about this you all are and, if you can disclose, how you’re tackling it? I would love to see both platforms succeed, really.

Thanks!

P.S. if you could please get any of Habito, Farewill, Bymiles or Boughtbymany to crowdfund that’d be :ok_hand:

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Which startup would you like to see crowdfund?

(Of the startups that never did so before.)

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If you could work at any of the startups you’ve helped fund…who would you pick?

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Do you have any plans to introduce fees like seedrs where they take 7.5% of any profit made?

I would like the suggest that you don’t as I believe taking the fee from profit is extortionate, unfair to the investor, and adds to the risk to an already risky investment.

Not sure if other investors feel the same but this is the main reason I use crowdcube over seedrs.

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TBH, I am not sure if CC should charge any fee for EXIT when they are charging upfront 1.5% fee. Seedrs doesn’t charge initial fee so I can understand that logic as initial fee doesn’t give any EIS benefit as well as getting lost when investor is not making any money.
But charging both entry and exit fee would be unfair.

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I’m aware of all of what you stated when I posted my question, I was not suggesting that they should charge entry and exit fee.

Perhaps I should’ve phrased my question better. Do you have any plans to change the current fees charged to investors?

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What would happen to the shares of an investment under the Nominee structure if Crowdcube were to go in administration? What is his view on such a risk?

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  1. There was a gap in the market. 2. He has the entrepreneurial personality and can sleep better at night when the house is on fire. 3. Make lots of money. It takes a lot of guts.

Questions for Luke:

What percentage of startups go bust? How many zombie startups are there that are neither formally insolvent nor growing? How many go through administration and survive after a rescue, while equity holders get wiped out or get less than they invested?

They must have some numbers.

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