Crowdcube’s CEO Darren Westlake on the trials and tribulations of launching a challenger brand

When my co-founder Luke Lang and I started Crowdcube back in 2011, we were launching the world’s first investment crowdfunding platform – so we were challenging the status quo in what was a very traditional industry. It was a gamble, like any new business.

The idea behind Crowdcube was sparked by the challenges I faced first-hand when raising money for my previous companies – that coupled with the distinct lack and accessibility of angel investors spurred me on to find another way to create more business angels. We wanted to enable other businesses to pitch ideas to a wider audience (“the crowd”), giving everyone the opportunity to be an “armchair dragon” by investing as little or as much as they like. 

From this, the idea of equity crowdfunding was born, effectively democratising investment for the first time and making it more accessible, affordable and rewarding for investors and entrepreneurs alike.

As with many startups, working full time for another company makes it extremely difficult to get the business off the ground, so we had to work weekends, evenings and lunchtimes. With no capital, we turned to parents, friends and family to fund the business in the early days – we lived off savings and even sold our cars. 

Crowdcube was launched on just £20,000. We did everything we could ourselves (marketing, etc). Outside suppliers were limited to our PR consultant and an external web company based in Bulgaria. 

Read more about crowdfunding:

As a young and relatively inexperienced challenger brand in an industry dominated by large, traditional financial institutions, we needed to make people sit up and take notice. Finance remains a challenge for many businesses and the finance sector has done little to innovate and provide alternative solutions – we knew there must be a better way for businesses to raise finance and we were determined to provide it.

In many ways the fact that we came from outside the finance industry meant that we came at it from a different perspective, an approach which I am sure helps us to identify with startups and even larger businesses raising money on our platform.

And the very fact that traditional routes to finance have made it difficult for startups and small businesses to access funding has helped crowdfunding to grow much more quickly than we could have anticipated. It’s fair to say that despite being a young industry, crowdfunding is now recognised by many as a mainstream funding option.

There’s been a big shift in the number of businesses turning to crowdfunding. Far from being a last resort, it’s often the first choice for many looking to raise finance today – from startups seeking seed-stage investment to more established businesses and well-known entrepreneurs, like Steve Smith ex-founder of Poundland and Hugh Fearnley-Whittingstall of River Cottage fame.

The challenge once you launch as a “first” in the market is to ensure you continue to remain at the forefront. We were the world’s first investment crowdfunding platform and the first to have institutional investors alongside the crowd. With a history of being a challenger, it’s important to remain innovative to cement that position and stay one step ahead of the competition. It’s an approach, which has served us well, with recent independent research from Crowdsurfer showing that so far in 2015 Crowdcube has secured British businesses more funding than all the other players combined.

We want to continue to push boundaries, deliver “firsts” and continue to work with pioneering and innovative businesses like JustPark, a platform that connects people with cars with unused parking spaces and driveways. The company raised the largest amount ever via Crowdcube this year, £3.7m alongside more traditional investors like Index Ventures and BMW i Ventures, the VC arm of BMW. More recently, we saw the first successful exit of a crowdfunded business following the sale of E-Car Club, the UK’s first entirely electric car sharing club for businesses and communities.

Now we have reached a new milestone in the business, announcing a new £6m funding round led by stockbroker Numis and VC firm Draper Esprit alongside existing investor Balderton Capital. This investment will enable us to continue to grow, and also ramp up new product development, including the creation of a new solution for companies going public. The intention is that they can still connect with their own customers as retail investors and not limit the IPO to institutional investors. Even large businesses want to embrace the crowd. 

As crowdfunding goes from strength to strength and continues to be accepted as a mainstream funding option, our goal is to continue to disrupt the status quo and forever remain the challenger brand in finance. We’re the Google of finance!

Darren Westlake is CEO and co-founder of Crowdcube.

Share this story

Close
Menu
Send this to a friend