Crowdcube on Crowdcube


(Andrew Clark) #1

Link being sent out to existing shareholders on Monday. Lots of information about who is backing them but does anyone know what their new valuation is?

I’m an existing shareholder and really value the work they do but would like to see them turn more of a profit somehow.


#2

I’ve read the email this morning and thought the same thing - crowdcube on crowdcube? :grin:
I think I also received their email the last time they were crowndfunding but didn’t invest as somebody said they’re not in a good position and I just let it pass. Are they profitable now? How much was the share price before?


(Big Boss) #4

They are adding an additional 1.5% fee on investors from 12 Nov onwards. Kinda cheeses me off considering they already charge companies that are raising on their platform 6%! Sounds like they are starting to monetise harder!

With that said, I don’t really know where they go from here or the exit. Would have to see their presentation (if they open it up to the public).


#5

I don’t know if it was the most recent raise, but there was one 1 Aug 2016 at 29p, if my maths is right.

“Draper Esprit, which is investing £6m, including £2m in secondaries” - so I guess some shareholders are getting out.


(Andrew Clark) #6

I have some stock from that raise and remember thinking £65m was a rather enthusiastic valuation at the time. But they are market leading and there’s a certain amount of power that comes from their position. I’ll be very interested to see the new numbers. US relationship with Seedinvest and a load of other foreign companies coming through certainly puts them in a strong position.

I think Seedrs have a different model, I think they take money when you sell stock so, if a company goes nuts they get a hefty payment from that. Changing to that model would have made Crowdcube a hefty amount of cash given the state of Monzo, Revolut, Brewdog etc


(Kenny Grant) #7

This is so meta.

I have a few investments with them now and don’t mind the investor fee too much if it keeps them solvent, but am not sure they will ever make a lot of money themselves - its not a huge market and is probably quite cyclical. Interesting they feel the need to do that, and are still fundraising.

I’m amazed if they’re making a loss when they charge companies 6%. Slightly concerned now at the mess if they did ever fold, I think once you purchase the shares you are the actual legal owner though?


(Emma) #8

Crowdcube on crowdcube is like googling google


#9

I’ve just read about this some mins ago when I checked out Thread’s updates. I’m only a small investor but I’d feel that fee. :slightly_frowning_face: I guess I’ll stick with Seedrs unless I really, really want to invest in a certain company.


(Andrew Clark) #10

You’ll be paying a lot more than 1.5% up front if you are investing with Seedrs. Look at how much their fees are when you cash out.


(Big Boss) #11

That’s only if you make money on your investment, I believe? If it’s below your initial investment or at par, no charge is taken?


#12

There’s a administration fee on any profit ( source ).

On the Wealthify sale there was a 7.5% fee on the profit.


#13

On Crowdcube you will pay 5% on £10, as there’s a minimum of 50p, there’s also a cap of £250. So it is targeting user quantities more than investment volume ( source ).

I think they want you to spend more per/investment. It’s easy to end up thinking in terms of relative pricing, as in 1.5% of £1,000 = £15, so what’s a extra £15?

I don’t think the extra 1.5% is a good move but we will see what happens to Crowdcube pitches over time.


(Luke Bebbington) #14

I tend to agree, but at least they are being open about it compared to Seedrs who don’t make it very clear that they will take a 7.5% performance fee on profit.


#15

I am also not a big fan of this 1.5% charge from Crowdcube and don’t feel that it positively aligns with their investors. Although the Seedrs fee is relatively high, it is well aligned with their investor base and should hopefully emphasise quality over quantity.


(Andrew Clark) #16

I don’t understand how Seedrs 7% on profits is better than Crowdcibe’s 1.5% fee on investment. Their userbases are roughly the same people.


#17

Purely from a financial perspective, I think it is difficult to say that one is better than the other and ultimately that will depend on the amount you invest and whether or not that investment was successful. For me, It is interesting that both Seedrs and Crowdcube have taken a different approach to monetising their platform and in my opinion one is more aligned with their investors than the other. Please note, I am a user of both and find both to be very good and somewhat similar in many ways, my choices are purely based on the investment opportunities they offer at any given time.

Crowdcube – The more money they raise the more money they make. The relative success of these businesses is of little consequence to their financial performance, assuming that they can find other businesses who wish to raise money via their platform. Clearly if the businesses are successful then they may raise further funds through Crowdcube and it will be a good marketing story to attract other businesses. My concern would be that they may jeopardise the quality and due diligence they perform in pursuit of attracting more companies to raise via their platform.

Seedrs – Like Crowdcube they also charge the company raising funds, however they only charge the investors on their platform should a profitable exit be achieved. I understand this to be 7.5% https://www.seedrs.com/how-to-invest-in-startups. This is quite high, but the key point for me is that it is only charged on the profit you make. Unfortunately, the risk of early stage businesses failing is high (I hope none that our community members have invested in) and in those cases Seedrs will not have levied any charge on those investors for their investment in those companies. In my opinion, this model more closely aligns Seedrs financial performance with the financial performance of the companies raising on the platform and more importantly the investors they are bringing these opportunities to. Yes, I may end up paying more in fees via Seedrs, but I will only be paying that money out of money that I have made and not money that I have invested.

Final thought… It might have been more difficult for Crowdcube to bring in the charge on exit model as they already have some large successes (Monzo, BrewDog, Revolut) and should an investor retrospectively get hit with this new charge on previous investments that have significantly outperformed, it would be unfair and would no doubt result in considerable backlash.


#18

I can see the need for crowdcube to be profitable in the long term so wasn’t surprised about new fee introductions.

I am surprised that it would be levied at the front end though. Some investments on the platform are very small so every % counts and as seems to have been said above, it doesn’t really align crowdcube with the investors.

Look at emoov. If it turns out that a sale happens below the value they raised at a few months ago on the platform then the spotlight will fall on crowdcube as to how robust their due diligence was in allowing them to raise.

Seedrs model, although hidden does seem better. The 1.5% lost up front could in itself have been a loss of many multiples of profit in the long run if the company is successful. So as an investor I would prefer to share in the spoils rather than miss out on potential future uncapped profit.

Of course I can see why they’ve done it, they can’t retrospectively add it to investments already made and 1.5% up front gives them certainty of an additional cash flow from day one. I just don’t like it and it will effect decisions to invest.I


#19

This should have been a success fee for investments made after the date.

Like others have said a success fee says we believe in the investment while a upfront fee does not.

It’s unclear if any investments made before the date but processed after this date will need to pay the fee.

Finally investors will be locked in to this fee for future rounds unless the company changes platform.


#20

I believe that any investment pledged before the 12th will not be subject to the 1.5% fee even though your card will not be charged until after this date.


#21

Thanks I don’t know how I missed that :+1:

So Crowdcube is the first major pitch to charge the 1.5%.

Only 4/15 people found the help desk page helpful :joy:

They’ve also put up the fees for companies to 7% excluding VAT and a ”…completion fee, which is on average 0.75% -1.25% of all funds raised…”