It would be better if Crowdcube made secondary market, then I wouldnāt mind paying fee for buying or selling shares, or paying a success fee.
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Makes sense for them to front load the charge - their business model is based on number of successful raises, not necessarily on the businesses actually doing well. They will make money regardless of the success of the compa y basically which is better for them.
I donāt really mind the charge - it can be heavily outweighed if the company is well valued, and a free investment in an overvalued company y would be worse for your returns really. Agree itās probably designed to also encourage greater investment value per investor, more efficient admin and greater raises.
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Pre-money valuation of Ā£73m versus Ā£65m pre-money in 2016. Given that the platform has grown in that time and Crowdcube has been a success it does say something about the previous valuation they put on themselvesā¦ Iāve no issue with their current valuation but disappointed that my previous investment hasnāt grown.
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I think Emoov may be the death of Crowdcube
I have very mixed thoughts about Crowdcube, personally I think most of the companies listed are not up to scratch (from my experience), those that donāt fail just become zombies (I believe is the word, they donāt actually die as such but just keep ticking along with no updates or growth or anything).
But then we get the occasional diamond amongst it all (For me that is Monzo and Freetrade).
I canāt see myself investing, Iād rather save my money for the next Monzo and Freetrade raises.
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This is public now and the discussions are pretty gruesome.
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I am a small shareholder in Crowdcube having invested Ā£5,000 over three rounds since 2011.
Unfortunately I was in a pretty bad car accident in South Africa last year and have had to take time off work to recover. Subsequently I would be interested in selling my shares in Crowdcube and wondered if there was any interested parties?
The last fundraising round saw the company raise Ā£7.8M (316% oversubscribed) at a pre-money valuation of Ā£73,696,910 in November 2018. See Crowdcube successfully raised Ā£2,500,000 - Nov 2018.
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This is amazing!
Not sure about this. The quality of due diligence of crowdfunding is relatively low. This will hurt the investors in the long term. Why should founders have better exit opportunities than any early investor?
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About time!
Not sure how this means Founders will have better exit opportunities?
Itās quite an interesting idea, if you want to get into late stage companies before their IPO, but by only investing a small amount that most crowdfunders Invest, the return is going to be limited.
Itās telling that Crowdcube planned to launch the first DCO months ago with a flagship startup, but the nominated DCO had cancelled in light of Covid.
Flagship startup - may this have been Monzo? and then all went south and so they pulled?
As far as can be inferred from the news piece it will not be a real secondary market like seedrs. It will be at the companyās discretion to launch a campaign with current shareholders selling their shares.
Imagine after a first couple of rounds founders selling a significant part of their stake and decreasing strongly the skin in the game they had.
Letās see the details of the implementation though.
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I think this is great. Sure, you still have to do detailed DD and founders cashing out would be a red flag for me. As long as they are transparent about whoās selling, Iām fine with this.
Edit: Sounds like this will be similar to EquityZen in the US but hopefully with lower minimums and easy to access for UK taxpayers.
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What CC announced sounds quite mediocre compared with what is already available on Seedrs. I have used Seedrsā secondary market for a couple of years and it is shaping up to become an excellent platform. Letās see how Seedrsā works when non-Seedrs startups begin trading.
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Seeds had the benefit of just shuffling shareholders under the nominee umbrella which minimised costs, if they do take on broking companies not under the nominee thatās a hell of a lot of extra work and imagine they would want a hefty brokerage fee for this.
Now Seedrs also offer direct then thatās also making it more complex but of course the direct are generally larger tickets , probably 25k up.
I assume Crowdcube will be offering to those who hold at least 10k and probably 25k worth of shares as pre their nominee structure all were direct and there is no economic sense if broking 10 to 100 quid clips.
I think it only makes sense either if crowd shares are under nominee or for direct that there is a level of say 25k minimum.
When its nominee its also going to be interesting as presumably the nominee can take decision to exit in the interests of the crowd. Now say Seedrs get a offer that gives the crowd say a 2x from a VC , would it be in the interest of the crowd to sell at that when there may be a 5 to 10x down the line.
The problem with also having a bid and offer it really shows what the crowd are valuing the company at and there may be some significant impact on the PRād returns when there is a indicative secondary market value by the promoters own exchange. For investors that maybe beneficial as it may bring more sanity to valuations for new raises.
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As far as can be inferred from the news piece it will not be a real secondary market like seedrs.
It sounds like a very clever PR spin on what effectively still is a fairly straightforward crowdfunding campaign but instead of buying newly issued shares, investors buy existing shares off existing shareholders.
It will be a great development for a handful of successful B2C companies and their customers IMO, but not a game changer by any means.
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To me this is nothing like a crowdfunding round. There is no funding going. The investee company wonāt be raising money and wonāt have to be involved other than approving the share transfers.
How is that not a secondary market?
The big difference I see is that I might get access to companies which didnāt originally raise via crowdfunding at all.
I agree with @hongkonggooner that this will probably only provide liquidity for shares held by the Crowdcube nominee or larger (>10k) direct holdings.
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