This post I would like to introduce someone else’s view on equity crowdfunding. At a recent talk I was giving to a Hampshire business network there was some criticism from both panel and floor about equity crowdfunding.
At the end of the evening I was approached by Bruce (not his real name), a handsome young man who made me reflect somewhat differently on the evening and the conversation that had flowed.
Bruce is an investor with Crowdcube – one of the leading equity crowdfunding (crowdinvesting) platforms in the UK. His story was so compelling I asked if he could email it to me for use here in the blog. To my delight he agreed and so below is a summary of that conversation/email.
For Bruce it all started back in July 2012 when he was working in Central London. On his way home he read in the London Evening Standard the headline ‘Forget banks, I raised £75,000 for my business dream via the internet‘.
Not knowing anything about crowdfunding, he read the article. It was about a young woman in Central London who had just raised £75,000 for her vegetable shop start-up business, which also delivers fresh produce to local homes.
She had been turned down by many banks and so turned to Crowdcube, which had only been founded the previous year. After her pitch was fully funded, she received the monies and the shareholders were issued the certificates, and as a result it became a publicised success story.
Bruce signed up to Crowdcube shortly afterwards, and began his first investments in fields as diverse as media platforms, recruitment agencies and energy suppliers. From here Bruce’s portfolio has grown considerably.
Criticism of this form of crowdfunding is often focused on warnings of Dilution, illiquidity, lack of dividends or no buy back. But Bruce countered these arguments so well I thought his story should be shared.
Bruce stated; “I believe I am doing something great, for Britain and for myself.
Let’s look at this this way: My background is Science and Technology, not finance. I believe there’s another 10,000 James Dyson’s in waiting here in Britain. The problem is the vast majority don’t get the enterprise springboard they deserve, and never launch as a result.
This is an injustice, and we need Britain to reclaim prosperity in Innovation and Industry. By investing in their pitches I am actively participating in that.
I have seen too many superb ideas go unfunded, and too many stupid ideas awash with cash. This issue is not just restricted to British science and technology, but at least I know I can do something to help in this area. Have you ever noticed an unusual device in a shop shelf and realised how utterly pointless and unworkable it is? Then you noticed a few months or weeks later that it has vanished.
How on earth was somebody greenlighted to sell cartons of Rhino Dung in Sainsbury’s as a collector’s item, whilst a unique tablet ingestion capsule and a collapsible scooter struggled to reach the market. If Sir Frank Whittle was able to Crowdfund his Jet Engine then WWII might have been over in 6 months.
Crowdcube lets us take a good look at the Business Plan and technological aspects, and question it or criticize it. This is a platform I find brilliant because I don’t have the time or resources to travel to fancy expo’s around the world.”
For Bruce, it’s the warm glow of helping that fuels his desire and commitment to the crowdinvesting. He considers any dividends or future buyback a Bonus.
But then Bruce said something even more intriguing: “What I am also after is to learn about the respective areas by getting access to insider information, biannual company updates, business plan updates etc. I don’t consider it a profitable exercise, not at this stage at least. We need bigger participation to put British technology back at the forefront where she belongs”.
Bruce, I think we hear you!
For the full story in the London Evening Standard see: http://www.standard.co.uk/news/techandgadgets/forget-banks-i-raised-75000-for-my-business-dream-via-the-internet-7941389.html
For more interesting information on crowdfunding and to keep up with this blog series follow the author, Chris Buckingham on Twitter!