Crowdcube fuses venture capital and crowdfunding for latest investment round

Having previously only used its own crowdfunding platform to raise growth capital, Crowdcube has secured institutional backer Balderton Capital as a new investor.

Crowdcube has closed a £3.8 million first close Series B transaction and are now looking to grow the figure to £5 million by using the crowd.

Balderton Capital, which has previously backed fellow alternative finance platforms Zopa and Wonga, is leading the transaction and has installed partner Tim Bunting as a member of the Crowdcube board.

The £5 million that will be ultimately raised has been earmarked for investment in UK and overseas expansion. Crowdcube has doubled its team to 50 and opened new satellite offices in London and Scotland alongside its headquarters in Exeter.

In an interview with GrowthBusiness, Crowdcube co-founder Luke Lang says the deal has been closed so that the business can help fulfil its vision and potential for growth.

When quizzed on why the crowdfunding platform had decided to engage with venture capitalists, Lang adds, ‘Securing venture capital investment, alongside the crowd, will give us invaluable insight and experience that will help us grow significantly.

‘Having Balderton’s Tim Bunting join the board of directors will be a tremendous asset for us and bring a wealth of experience in building disruptive, innovative and profitable businesses.’

With Crowdcube having facilitated £15 million worth of investment for businesses this year, and £30 million since launch in 2011, Lang says the investment puts it in a ‘strong position to really hammer home our advantage’ and expand the market further.

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The investment round comes on the back of a new product launch from Crowdcube. In June, the alternative finance platform announced a mini-bond offering, akin to the finance method used by John Lewis and Hotel Chocolat – with Mexican restaurant chain the first to utilise the system and raise £1 million. Since then, Hugh Fearnley-Whittingstall’s River Cottage business itself raised £1 million for site growth.

Crowdcube’s last funding round for itself came in May 2013 when a ‘world record’ crowdfunding transaction saw it raise £1.5 million and secure a value of £7.1 million. Before that, its platform had also been used to raise £320,000 from 162 backers.

The ‘world record’ round was subsequently broken by TV personality Kevin McCloud and his Hab Housing venture in September 2013 when he raised £1.95 million.

Explaining the investment from Balderton’s perspective, Bunting says, ‘We love the way Crowdcube is disrupting and democratising investment into business seeking growth finance; Balderton is always looking to support new approaches to traditional financial services, and Crowdcube’s trailblazing model makes investment accessible, affordable and transparent.’

The news of Crowdcube’s growth capital deal comes on the same day that debt-based peer-to-peer platform Funding Circle banked $65 million from backers including Index Ventures and Accel Partners to continue with its worldwide expansion.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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