A new website has launched that allows small businesses to raise equity finance from members of the public.
Crowdcube gives companies the opportunity to pitch for investment from the public in a manner similar to the UK television show Dragon’s Den.
Company profiles feature information about the business and a fund-raising target. If the target is not meet, all the money is returned to investors. For each pitching company, a fund-raising bar shows how much money toward the total has been raised so far.
Crowdcube says it hopes to tap into ‘Britain’s armchair dragons’ to help growing businesses find the funding they need. Users of the site can invest as little as £10 ($16) in return for an equity share in the companies listed. Crowdcube says it will take 5 per cent commission from any successful fund-raising.
At launch, Crowdcube had six companies pitching on the site, seeking fund-raising of between £30,000 and £120,000. The businesses range from White Van Ads, a company that pays drivers of white vans to wrap their vehicles in advertising, to equine-assisted psychotherapist Equus Solutions.
Darren Westlake, co-founder and managing director of Crowdcube, says companies need help finding investment as banks have a low-risk attitude and venture capitalists are hard to access.
‘We are democratizing an age-old model for raising business finance by empowering the crowd to pool small amounts of investment money and give Britain’s start-ups a much needed boost,’ he writes in a blog post on the Crowdcube website.
Crowdcube hopes to build on the growing trend for ‘crowdfunding’, where individuals or organisations pitch their cause – usually online – in return for investment.
The website calls itself the ‘first crowdfunding website in the world to offer ordinary people equity in exchange for investment’.