Lang revealed that successful pitches tend to have two-three cornerstone investors, accounting for 28 per cent of the total raised. On average they commit £140,000 between them, with the top investor typically pledging £90,000, and the next two £30,000 and £20,000. The remaining smaller investors collectively invest the lion’s share of funding, according to Lang, who said accessing this long tail of investors is crucial to a pitch’s success. There’s an average of 104 investors per successful pitch, the smallest investment is £10, the average £2,500 and the largest £250,000. Read more on equity crowdfunding:
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Crowdcube expects to have 250,000 to 300,000 registered investors by the end of 2015, compared to 120,000 at the end of 2014. The growth in the number of people using the platform is creating an increasing number of specialism and Lang believes this is why everything from art and design to bio-tech have been successful, including Cell Therapy,which recently raised £691,651 of a £250,000 target. “We’ve seen a real evolution. We should forget what angel investment was like before crowdfunding. This used to be an exclusive pastime of the super-rich and well connected. It was very elitist. That’s changed fundamentally and that’s had a transformational impact on the business finance landscape,” said Lang. Crowdfunding also means investors can diversify their portfolios because it enables them to target numerous growth stage business with smaller amounts, something that’s very difficult to do with traditional angel investing. “The key is facilitating it and making it easy to diversify. It’s the most high-risk asset class there is. It can be very lucrative if you diversify and build a portfolio of businesses. Crowdcube makes it easier for that to happen. There’s always a steady stream of interesting businesses at different stages for people to invest in. That’s one of the big breakthroughs; people can build portfolios with a relatively small amount of money,” said Lang.
There are a number of investors on Crowdcube that have large portfolios, with one per cent investing in 43-101 companies and one per cent 21-43. The detailed demographics of entrepreneurs highlights an industry-wide gender imbalance, with women leading just 11 per cent of pitches on the site. However, female entrepreneurs are considerably more likely to receive funding, with 90 per cent being successfully, compared to 35 per cent of pitches across the entire platform. Lang noted female entrepreneurs tend to be better prepared, understand the importance of community involvement, don’t overvalue businesses and typically come to the platform with some market traction, all of which means they’re pitches are more likely to be successful. What’s next for Crowdcube? The platform expects to fund 100 businesses in 2014, raising around £35m collectively, compared to 165 in its first four years. Image: Shutterstock
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