Just two announcements, one from Crowdcube and one from Seedrs, have propelled the industry to the forefront of the City’s attention. For those of us who have done our best to champion crowdfunding with the government, financiers, and the media it is cause for celebration. What is going on?
Firstly Seedrs announced that Lord (Jacob) Rothschild together with the City’s favourite fund manager (now that Anthony Bolton has retired) Neil Woodford have taken a £7.5m stake in them.
Seedrs CEO Jeff Lynn said: “The greatest fund manager of our time and the greatest financial family in history have looked at the equity crowdfunding space, decided that there is a huge opportunity to be won, and decided that Seedrs is the one that’s going to win it.” A little over the top, but I can forgive him.
Secondly, Crowdcube announced that Numis, one of the UK’s most successful stockbroking and corporate finance businesses, was taking a seat on its board and investing £6m for an 8.5 per cent stake.
Numis CEO Oliver Helmsley said: “We think Crowdcube will have the opportunity to democratise IPOs [initial public offerings] in the future, and we’ll work with them to do that so that individuals can get access to IPOs that in the past they haven’t been able to. We think that companies will raise money via online platforms with increasing frequency.”
In other words, Numis will open up AIM IPOs to, for example, all readers of this article, as opposed to just carrying on offering them to a small and dwindling number of institutional investors.
As Crowdcube’s CEO, Darren Westlake knows this is a move I’ve been advocating for some time – so huge congratulations to him in finding so able a partner as Numis.
Why is this such an important development? Because at a stroke this deal brings the advantages of public market due diligence levels, valuation criteria and tradability to equity crowdfunding. Or as Helmsley put it: “We want to bring some discipline and some reality to valuations. There are always growing pains when new areas are developed.”
There are a whole host of (pleasing) lessons to be drawn from this. Firstly everyone in UK finance knows that Helmsley, Rothschild and Woodford are top of their respective games, so no longer can equity crowdfunding’s detractors dismiss this industry as some sort of passing fad.
This in turn provides the UK with the real prospect of opening up investment to the mass market, which in turn provides the depth of long term capital to companies, which in turn provides prosperity, which in turn feeds back into the crowd providing further capital as the crowd becomes more used to putting cash to work that otherwise might have been frittered away down the Dog and Duck, or at the racetrack.
Read more about Crowdfunding:
- An argument for investment crowdfunding having reached a stage of maturity
- E-Car Club: The investor story behind crowdfunding’s first proper exit
- Exploring the true power of the crowd – it’s not all about money
Some of the more prescient politicians and financiers are realising that the financial crash of 2008 made most of the adult population realise that a secretive small number of institutions were playing with our money to their benefit and not ours and when the music stopped much of it had gone.
Hence we want more of a say and a choice in what happens to our money and crowdfunding can and will fulfil a real need here. We like to be involved. We don’t want to be limited to a few monster financial corporations because we don’t believe those megaliths anymore.
Dear Real Business reader, Messrs Woodford, Rothschild and Helmsley have opened the door for you – so now you can come in!
Do you agree with The City Grump that this is a watermark moment for the UK crowdfunding industry? Let us know in the comment box below.
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