CUBED. Issue 3 - Q2 2017

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1 CUBED Issue 3 - Q

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3 Cubed - Foreword Foreword Welcome to the third issue of Cubed. It s been just shy of a year since we raised 7.7m from our supportive crowd and we re continuing our journey of democratising equity investment. The marketplace is as vibrant as ever as Crowdcube continues to hit new milestones; over 500 raises have successfully funded on the platform and we ve amassed a community of more than 400,000 members. Throughout this edition, we look back over the last six months to give you more information about how we ve maintained our market leading position, presenting you with the clearest picture yet of the equity crowdfunding market. Not only that, since April we ve had three businesses from our Funded Club provide investors with financial returns. The first was from Celixir which delivered a 2.7x return, the second from Mettrr Technologies which completed the first on-platform secondary share trade on Crowdcube, and the third from BrewDog after it was valued at $1bn - making it Crowdcube s first unicorn. You can read more about these exits, plus much more in Cubed. From us all at Crowdcube, we hope you enjoy - maybe with a beer or two! Luke Lang Co-founder 3

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5 Cubed Industry Crowdcube Funded club 08 Six crowdfunding models Crowdfunding models explained 14 The clearest picture yet Equity crowdfunding market 16 Market update Equity crowdfunding in Spain ,000 female investors - and it s not enough 22 Seven top tips for investing on Crowdcube 24 Top tips to crowdfunding success 28 Are you claiming tax relief? 32 The changing face of equity crowdfunding 40 Crowdcube turns six 44 The latest Crowdcube data 46 Browse and invest on your ipad with the Crowdcube ios App v successful raises on Crowdcube 50 50th raise to top 1m 52 We re now a community of over 400,000 members! 54 Product update 56 Partnerships 60 European expansion with WeWork 64 Mettrr Technologies First on-platform secondary share trade 66 BrewDog is valued at 1bn Crowdcube s first unicorn 68 Celixir delivers 2.7x return 70 Farmdrop: Where are they now? 74 Seadog Productions 76 Disarmco 77 Hop Stuff Brewery 78 Funded Club Featured in Startups 100 best businesses of In the Cube 34 Industry Trends for

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7 cubed - Industry 48% Market share Bringing you the latest on the crowdfunding scene, as well as the latest market data from Beauhurst and top tips on investing and raising on Crowdcube. 7

8 cubed - Six crowdfunding models Six crowdfunding models Crowdfunding models explained Utilising the power of the collective to achieve challenging goals is not a new phenomenon, think the Longitude Prize in 1714 and the crowdsourced creation of the chronometer. However, in a contemporary sense, crowdfunding began gaining real traction in 2008/09 with the birth of reward-based platforms IndieGoGo and Kickstarter, the two US giants, in an industry that has raised more than 2 billion globally. This is a good place to start differentiating the platforms and six key business models I am choosing to focus on. These are reward-based, donation-based, micro-lending, peerto-peer, peer-to-business and equity. 8Industry

9 cubed - Six crowdfunding models Rewards-based crowdfunding Investors on rewards-based platforms like Crowdfunder, IndieGoGo and Kickstarter are often called pledgers or backers. These platforms will most frequently list products, services or projects allowing the backer to pledge an amount of money for a reward, with structures tiered to reward the largest backers to receive the highest value or most unique reward. This could be a high-tech watch like the Pebble watch, a 3D laser printer or a video game like Star Citizen ; which claims to have raised over 100,000,000, the largest crowdfunding campaign to date. Although it s worth noting that on Kickstarter the average raise size is closer to 16,000. Often the type of businesses you will find on these platforms is focusing on pre-sales to bring something into creation or prove a concept. According to Kickstarter, music, film and video, publishing and art lead the way by a number of successfully funded campaigns, however, games, technology and design are top of the log by the amount of funds raised, responsible for many of the six and seven figure campaigns. An important word of caution, whilst many of the successful campaigns meet the timelines for product or service delivery, some have been known to be late or of poor quality, so one of the key risks is backing something that may never be built or created. That said, the majority of the platforms don t charge pledgers or backers at all. They simply charge a fee of between 3-5% on the total amount raised for successfully funded campaigns and you can pledge from just a pound and up. Industry 9

10 cubed - Six crowdfunding models Donation-based crowdfunding Donation-based crowdfunding is structured almost identically in terms of business model to rewards-based crowdfunding, with one important exception, the altruistic element. Thus, people pledging or backing are typically donating without the expectation of receiving anything in return. This links to the type of campaigns on platforms like JustGiving, which lists personal causes and charitable events most frequently and describe themselves as a tech-for-good company, reinvesting profits into tools to make giving easier for everyone. Since 2001, JustGiving has raised 3.3 billion, however, in the UK in 2015, excluding community shares, 12 million was raised with an average campaign size of 714. Validating a common theme, donation-based platforms don t charge pledgers a fee but will charge circa 5% listing fee, and card processing on the final amount. Furthermore, circa 85% of listings, due to the charitable receivers, are eligible for Gift Aid, a 25% government tax incentive which boosts giving. So for every 10 pledged, the government will add 2.50 to eligible causes. Micro-lending One of the lesser known variants of crowdfunding is micro-lending, where the likes of Kiva connect people through lending increments of $25 or more, to alleviate poverty and create better futures. Kiva boasts 2.4 million borrowers, 1.6 million lenders and since 2005, has facilitated almost $1 billion dollars at a repayment rate of 97%. For example, you can lend to someone to start or grow a business, go to school or access clean energy. Typically these platforms are not-for-profit organisations, so all donations go to funding loans - they don t take any fees. Industry The remaining categories of crowdfunding are grouped by the Financial Conduct Authority, the industry regulator, as investment crowdfunding platforms. Over the last four years, the debt-based crowdfunding platforms have grown remarkably, albeit not without their challenges, with this growth fuelled by institutional investment flowing through the platforms. The debt-based platforms are split into two core categories; peer-to-peer (P2P) and peer-to-business (P2B). 10

11 cubed - Six crowdfunding models Peer-to-peer lending P2P platforms, like Zopa and Ratesetter, enable investors to lend to individuals from annualised rates of between 2% and 6%, although these fluctuate with interest rates changes. Not unexpectedly, with liquidity comes a lower return and the rolling monthly rate of c.2%. The maximum lending term is five years with circa 6% return and you authorise the platforms to invest on your behalf across a diversified number of borrowers. To date, c. 4.2 billion has been lent in the UK by P2P platforms. Across the platforms, repayments differ from monthly to the end of the term. Some of them, like Ratesetter for example, offer a Provision Fund designed to cover losses for investors and to date, none of the fifty odd thousand investors have ever lost a penny. The fees for investors differ marginally across the P2P platforms, but typically no fees are charged to lenders if they see the term of the loan. However, to access capital lend before the end of the term, sellout fees of between % are charged on the sum returned. Peer-to-business lending Of the P2B platforms, Funding Circle dominates in an industry that has raised 4.7 billion in the UK to date. P2B platforms enable everyday investors, local councils, the government and institutions to invest in businesses across the UK. As with P2P lending, interest rates are based on a myriad of factors including the risk band and term of the loan. As an investor, you can select the business you want to lend to directly or allow the platform to lend automatically using an auto-bid function, on some of the platforms. Typical annual returns are circa 7%, although you ll receive monthly interest repayments and have the option of accessing your money early for a small fee. A platform like Funding Circle will also charge you an annual 1% fee on all borrower repayments. Unlike the P2P platforms, bad debt must be considered as there is no provision fund to mop this up if repayment failures occur. Industry 11

12 cubed - Six crowdfunding models Equity Finally, Crowdcube tops the log in the equity crowdfunding, which, as an industry, over its six-year lifetime has raised about 500 million in the UK, about half of this raised by Crowdcube, with the next nearest competitor just over 100 million. Without wanting to teach grandma to suck eggs, equity is the most complicated of the crowdfunding variants, facilitating investment into a startup, early stage and growth companies for a pro-rata equity stake. The type of businesses available for investment is broad to ensure investors are given choice. Investments can be made from as little as 10 with no maximum in place, which typically culminates in prorata ownership of the investee company via ordinary or B investment shares. Primarily such investments will be placed into businesses with the end goal of making a return within a 5-10 year timescale, via a liquidity event such as a trade sale, in some cases a share buyback or secondary market or in rare cases an IPO. The potential returns are significantly higher on the equity side of crowdfunding but so are the risks. Given the fact that a reasonable proportion of startups fail, diversification becomes absolutely key. Crowdcube recommends that you diversify across at least ten businesses annually to help protect yourself from sectoral, political and economic shifts. The reality is that most investors in the equity crowdfunding sector are investing across multiple businesses in the knowledge that 60% may not earn them any return whatsoever, 30% may earn them their money back or a small return, and they hope 10% can earn them a far larger return. A final, rather important consideration on the equity side of crowdfunding is the government tax incentives. Early stage businesses in a large number of sectors are able to apply for tax relief, which affords eligible investors either a 30% or 50% tax relief on their investment with the aim of de-risking investments into startup and early stage businesses. Industry 12

13 cubed - Six crowdfunding models It s abundantly clear that the six crowdfunding variants listed offer a plethora of choice for investors, from donating to worthy causes or backing preconcept tech projects, through to investing in equity in start-up companies for long-term returns or lending money to consumers and businesses across short, medium and long-term loans for a pre-defined interest rate. Crowdfunding is a broad spectrum, growing at a remarkable pace, all fuelled by the rise of our digital world, global connectivity and the internet. Thank you, Robert Kahn and Vinton Cerf for the small matter of inventing the internet protocol. Written by Michael Wilkinson Head of Equity Investment Michael was one of the first Crowdcube employees, joining in 2012, and has helped grow Crowdcube from idea to the world s leading investment crowdfunding platform. He is the Head of Equity Investment and manages the entrepreneur journey from due diligence through to successful funding, and has helped hundreds of companies prepare for and execute early stage funding rounds. Industry 13

14 cubed - The clearest picture yet The clearest picture yet Equity crowdfunding market The Beauhurst quarterly report on the crowdfunding industry has been released and the latest figures tell us what we have known for a long time; that when it comes to investment raised we re blowing the competition out of the water by a substantial margin. Platforms by amount invested ALLBRIGHT CROWDCUBE SEEDRS SYNDICATEROOM VENTURE FOUNDERS PRE-EMPTIONS AND FUND CAMPAIGNS PRE-EMPTIONS 50k 23m 9.3m 8.5m 7.3m Source: Beauhurst Crowdfunding Index - Equity crowdfunding in the UK Q Industry 14

15 cubed - The clearest picture yet Capital successfully invested is the key measure of platform performance for savvy entrepreneurs and astute institutional and private investors rather than over-simplistic data based on deals completed, which can be highly misleading. For us, this is more important than the number of deals done as it reflects how Crowdcube and the market is maturing. According to AltFi Data we have achieved the highest internal rate of return (IRR) in equity crowdfunding to date and have been responsible for the most number of exits our sector, we re currently beta testing our secondary market platform and completed the first on-platform secondary share trade earlier this month. Crowdcube recently announced its second consecutive record quarter putting the business on a trajectory to beat last year s investment record of over 80 million raised, further proving that the sector is now a mainstream funding option. Industry 15

16 cubed - Market update market update Equity crowdfunding in Spain Equity crowdfunding in Spain is growing rapidly, with Spanish-based crowdfunding platforms already raising more than 100% of the total funds raised in 2016, in the first six months of 2017 alone. According to statistics collected from 1 January to 31 June 2017, 9.6m has been invested in 39 companies, across the equity crowdfunding market in Spain, in the first half of the year. This figure, despite still being small compared to the UK market, exceeds the 100% of the total investment in 2016 ( 9.2m), which is a clear sign that equity crowdfunding is now being recognised as a primary source of funding for Spanish startups. Crowdcube Spain has now crowdfunded over 10.1m for 47 different Spanish companies since the Barcelona based platform launched in July The Spanish platform has already channelled 3.1m euros in the first six months of 2017, 80% more than the same period of the prior year. By sector, it stresses the importance generated by fintech and technological companies in general: in March of this year, the crowdlending platform LoanBook closed a 641,115 round from 124 investors through Crowdcube ( 1.75m euro in total, with institutional investors); in April, the private lending platform Zank closed its second round with the platform, ending with 490,450 from 201 investors, and in September of 2016, the Spanish geolocation app Wave closed a crossborder investment round of 900,000 from 589 investors from 31 different countries. Industry 16

17 cubed - Market update A note from Pepe Borrell, Managing Director of Spain: We ve seen an incredible increase of confidence from institutional investors and HNW in Spain this year. VC s and institutions understand the impact on businesses raising from the crowd alongside them and empower their portfolio companies to raise finance on Crowdcube. Our international community of investors is also looking for Spanish companies to diversify their portfolio across Europe, which is a key objective for us. The future is exciting and we think that during the next six months we will see an increasing number of VC co-investment opportunities from Spain thanks to our new cross-border and nominee service. We re continuing to offer the best investment opportunities on the platforms, and intend to continue a co-investment model, which combines investment in companies with high potential for growth in private investors or retail, with professional and institutional investors. With this objective, this year, we ve reached a collaboration agreement with the Business Angels network ESADE BAN to co-invest in Spanish startups. The Spanish equity crowdfunding market is shared among six platforms: Crowdcube, The Crowd Angel, Socios Inversores, La Bolsa Social, Capital Cell and StartupXplore. Industry 17

18 cubed - Market update There are four factors driving the growth of the sector in Spain: 1 The enactment of the Spanish Crowdfunding Law (Law 5/2015), 2 Support from public institutions, such as ACCIO, the agency for business which now regulates a private capital competitiveness, which has helped market for the first time ever in Spain. provide visibility for the sector and equity crowdfunding platforms. 3 Collaboration between platforms and traditional investors, which has helped 4 An increase in follow-on rounds from companies that have facilitate larger funding rounds by used equity crowdfunding and enabling different types of investors, returned for further funding. such as institutions and business angels, to invest alongside the crowd. Industry 18

19 cubed - Market update Our Crowdcube Spain team Azahara Garcia - Head of BD in Spain Pepe Borrell - Managing Director in Spain Oriol Cordón - Finance Director in Spain Helena Checa - Legal Associate in Spain (Jan-June) Industry 19

20 Cubed - 100,000 female investors 100,000 female investors - and it s not enough Recent Beauhurst data in The Entrepreneurs Network report showed that there is an evident gender bias against female entrepreneurs receiving funding, despite the fact that female-led businesses are less likely to fail. In fact, data shows that in 2016, 3.58bn went into growth companies without a single female founder. That s 91% of all publicly announced investment deals. Compare that to the dismal 358.4m (9%) invested in companies with just one female founder and perhaps, like me, you want to bash your head against the wall. Industry 20

21 Cubed - 100,000 female investors I spoke with Anne Ravanona, founder and CEO of Global Invest Her, a couple of weeks ago, after watching her Ted Talk on investment into female founders. Anne informed me that only 7% of partners at the top 100 venture firms are women. Andreessen and Horowitz only has one. A bleak 14% of angel investors are women, yet women are fast approaching control of 50% of wealth in the UK - in America, women have overtaken and sit at 51%. At Crowdcube, female entrepreneurs have a historic funding rate of 75% compared to the 55% achieved by their male counterparts. Actually, in the last quarter alone, female founders have successfully raised nearly 6 million for their businesses. 27% of investors at Crowdcube are female - that s more than 100,000. But it s not enough. We want more. So, in partnership with Global Invest Her, we re currently running a four part webinar series to elevate and educate female founders from across the globe. It is one of many of our partnerships aimed exclusively to our female audience. Contributor Emily Cassius Partnerships Associate Emily works in the partnership team at Crowdcube, focusing on Growth Services for entrepreneurs and the Funded Club. She has been instrumental in setting up and scaling the wider partnership function within Crowdcube. Industry 21

22 cubed - Seven top tips for investing seven top tips for investing on Crowdcube Sign up To view the pitches in full, either on our ios app or on desktop, you will need to sign up and create a Crowdcube account. This should take you no more than a couple of minutes, and you will then be able to view all of the investment opportunities at www. crowdcube.com/investments. Tax relief Have a look to see if the pitch is eligible for SEIS or EIS tax relief. The Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) are designed to encourage investment into seed, startup and growth stage companies by offering a range of tax reliefs to investors who purchase new shares in those companies. You can potentially claim income tax relief up to 50% on your investments. Do your due diligence APPROVED As a platform regulated by the Financial Conduct Authority, we review and approve every pitch on the site to ensure that all the information presented to the crowd is fair, clear and not misleading. You can find our equity crowdfunding Due Diligence Charter at Industry With regards to conducting your own due diligence, we strongly advise that before making an investment you read all of the information available to you on the pitch page, and watch the video in full. You can also participate in pitch discussions, request a business plan, or contact the company directly to arrange a meeting or call, all through the pitch page. 22

23 cubed - Seven top tips for investing Follow (& archive) You are able to follow any of the pitches you are interested in by clicking the follow button underneath the company logo on the pitch page. This ensures that you receive any pitch updates the company send. You can then spend time conducting your due diligence, and following the company updates, before deciding whether or not to invest. Comment on the forum Each pitch will have a discussions forum, where you can pose questions to the business directly. You are able to post a new discussion, comment on an existing post, or just conduct your own due diligence by reading the existing discussions. You can also contact the company directly to request a business plan, call or meeting. Diversify We strongly advise that investors implement a diversification strategy when building an investment portfolio. Diversification involves spreading your money across multiple investments and will give you, as an investor, greater peace of mind that your investments will be sustained in adverse market conditions, and losses will be cushioned. However, please note that it will not lessen all types of risk. Portfolio updates Subscribe to our s and receive your monthly portfolio update, showcasing the latest news from the businesses you invested in. Industry 23

24 cubed - Top tips to crowdfunding success Top tips to crowdfunding success In April this year, Bluebird Tea Co. hit their crowdfunding target within 24 hours of going live on Crowdcube. After releasing further equity, the company went on to secure 365k in just under 48 hours from 289 investors. Co-founder Krisi Smith shares her tips for ensuring a successful and rapid raise. My partner Mike and I founded Bluebird Tea Co. from a back bedroom in 2013 and we currently sell our teas through our three retail stores, an international website and our 150 independent stockists. We have a passion for mixing together unusual flavours and our specialism is creative tea blending. With big plans to open three more stores this year, we chose to crowdfund, not only for the cash injection but also to get more people involved in the Bluebird community. Coming into our raise we had prepped for months, working with the team at Crowdcube to make sure things went smoothly when we were live. Even though we were prepared we were still a little panicked as it dawned on us in the first few hours that it was going to go much quicker than expected! We went live at 11am and hit 30% within the first hour and 100% by that evening. The phone wouldn t stop ringing and we were trying to bring forward our updates and marketing to ensure we let everyone who had signed up for updates know so they had time to invest. Industry 24

25 cubed - Top tips to crowdfunding success Industry 25

26 cubed - Top tips to crowdfunding success Despite the slight chaos we had a fantastic experience on Crowdcube and so I wanted to share our top 5 tips that helped us successfully fund in 24 hours: 1. Know your audience (and tone) Before we started any pitch planning we took the time to fully understand our audience and soon realised that we had three potential groups, each with very different demographics and motivations for investing (our customers, seasoned Crowdcube-ers and business contacts). Once we had this clear in our head we made sure we tailored our communication to suit each group. 2. Utilise your networks (and their networks!) Mike and I really brainstormed all our potential connections and made sure we asked everyone to share with their networks for maximum exposure. In the end, we had investors from: Secondary school, family and friends, university college, university business school, suppliers of Bluebird, Stockists, past employers, past employees, team members, old sports teams, press contacts, contacts from networking events, local community groups, charities we have supported... the list goes on. 3. Warm up your community As with many businesses that started small we knew our passionate and loyal followers would want to get involved. But many of our customers had never heard of crowdfunding before so we had to make sure we had a clear message that addressed the main questions they may have: What is crowdfunding? Why is it important to Bluebird? What are the benefits for them? How do they get involved? We started this activity a month before we aimed to go live, aiming for each person to see it 3-5 times before the big day so they had plenty of time to learn about it. 4. Be realistic about your preagreements Mike started having conversations with business contacts in the weeks coming up to the raise to try and secure investment. These conversations went really well and we made sure to keep a track of potential investments so we knew where we stood. We also made sure we covered all the potential barriers to investment during these conversations including risks, size of investment, when they would need to invest and how to actually do it on the platform. Remember many of your key early investors are very busy people so if you don t make it easy for them to invest, they might not have time to do so. Industry 26

27 cubed - Top tips to crowdfunding success 5. Prepare your investors to be flexible One of the things we could have done better is to warn our pre-registered community to be prepared to invest with urgency if needed. Many customers missed out as we had told them during our warm up marketing that we expected it to take weeks, rather than hours, to hit our target! On the plus side, we now have a growing list of people to contact first next time! Guest contributor: Krisi Smith (pictured on previous page) Co-founder of Bluebird Tea Co. Over the past 7+ years, Krisi has built her reputation as an expert in the tea industry - consulting for brands such as Unilever, Soho Farmhouse and Not on the High Street and is the published author of the World Atlas of Tea. Industry 27

28 cubed - cubed Are you - Crowdcube claiming raise tax relief? Are you claiming tax relief? When investing on Crowdcube, you can see which businesses are SEIS or EIS eligible by visiting a company s pitch page. These tax relief schemes (Enterprise Investment Scheme and Seed Enterprise Investment Scheme) were set up by the UK government to encourage investment into more early-stage, higher risk companies. In return for accepting this risk, investors are offered up to 30% tax relief for EIS eligible investments and up to 50% tax relief for SEIS eligible investments. But do you know if you re eligible and if you are, are you claiming it? Once share certificates have been issued for your investment, SEIS3 or EIS3 forms will be sent to the address listed on your Crowdcube account. Industry 28

29 cubed - cubed Are you - Crowdcube claiming raise tax relief? Is the company eligible? The company you ve invested in must have reached 100% or more of its investment target; To start the process of creating certificates, the company must firstly have been trading for at least 4 months; What s the process? Following a successful round, the company will prepare all the necessary paperwork. They will then collate a list of investors who are interested in receiving tax relief, and send this information to HMRC. This process can take up to 6 weeks; Once the certificates are with HMRC it will be approximately 6-8 weeks before they are sent to the company to sign; Once signed by the company, the certificates will be sent out to you by post; You can then claim any relief you are eligible for by sending the claim form section of the SEIS3 or EIS3 form to your tax office; If you are not in a position to send the claim form, the documentation you are sent will direct you on alternative ways to claim your tax relief Industry 29

30 cubed - Are you claiming tax relief? Your claim can be made on the Self Assessment tax return for the tax year in which the shares were issued. If you have an SEIS3 or EIS3 for a year for which you have not yet received a tax return you can request a change to your PAYE (Pay As You Earn) tax code, or an adjustment to any Self Assessment payment on account due. You will still have to make the claim itself on your tax return when you get it. Claims can be made up to 5 years after the investment was made. How much could have been claimed by Crowdcube investors? If all investors were eligible to claim tax relief in EIS or SEIS eligible businesses, more than 50m could have been claimed back since Crowdcube launched in 2011, out of successful investment through the platform. Industry To find out more and to see if you re eligible, read our quick guide to tax relief on 30

31 cubed - Are you claiming tax relief? PLEASE NOTE: The availability of any tax relief, including SEIS and EIS, depends on the individual circumstances of each investor and the company concerned, and may be subject to change in the future. If you are in any doubt about the availability of tax reliefs, or the tax treatment of your investment, you should seek independent tax advice before proceeding with your investment. Industry 31

32 cubed - The changing face The changing face of equity crowdfunding Since 2011, the Crowdcube investor community has grown from Zero to over 400,000 members. As investing online becomes mainstream and our investor community continues to grow, we analysed some of the emerging trends behind the maturity of Crowdcube s investor base and equity crowdfunding in general. Despite being founded in the UK, Crowdcube s investor community is increasingly international, representing over 175 different countries. In line with our market leading position in the UK, we re also dominating the growing market in Spain, with 46% market share. This reflects growing international recognition of equity crowdfunding as a viable source of capital for companies as well as an open, accessible route to invest in some of Europe s most ambitious businesses. Crowdcube recently opened offices in Paris and Amsterdam to capitalise on this continued trend. The makeup of the investor community is also changing. Despite women representing just 13% of decision makers in UK Venture Capital, 25% of Crowdcube investors are female. Regardless of who s investing or where they re from, everyone is going mobile: 20% of Crowdcube investments flow through our ios app, which has processed over 4m of investment since it launched just ten months ago. Industry 32 The ease of access offered online or via our app is enabling a more diverse mix of investors to invest in great businesses looking for funding. While the barriers to entry are very low, with a minimum investment of just 10, investments of over 1m are becoming increasingly common. As well as the investment spread, the age groups reflected in the Crowdcube community continues to remain inclusive. Investors in their 30 s, 40 s and 50 s represent large sums of capital but investments from year olds are increasing rapidly and there has also been an uptick in the number of investors in the 60+ bracket, with Crowdcube s most senior investor recently celebrating their 92nd birthday.

33 cubed - The changing face Another reassuring trend has been the increased number of Institutional Investors, such as Venture Capital and Angel investors, collaborating with the Crowd to back great companies. Over the past two years, the number of investments involving Institutional and retail investors on Crowdcube has increased by 300%. Monzo, a digital challenger bank, raised 22m from a combination of Crowdcube investors and Venture Capitalists Thrive Capital, Passion Capital and Orange s Corporate Venture arm, Orange Digital Ventures. Co-funded rounds like these are becoming increasingly common. Interestingly, while Institutional Investors operate a different investment process to retail Investors, the behavioural characteristics of these groups is not as different as first thought. Recent research and feedback from our members shows the broad motivations behind both groups are strikingly similar. Both seek portfolio diversification and greater returns by investing in businesses they believe in. These findings complement previous research from the London School of Economics showing that, contrary to any misconceptions about herd mentality, retail investors tended to collaboratively share and surface meaningful information to make an informed investment decision. To capitalize on this, Crowdcube recently launched the Investor Success program, designed to facilitate greater collaboration between Institutional and retail investors. Combining best in class Institutional investment processes with the shared knowledge and collective analysis of retail investors to back great businesses from seed- stage through to exit. Contributor Todd Wilson Head of Investor Success Todd has a passion for Startup and Growth stage companies. Since joining Crowdcube he has helped more than 50 companies raise over 90m in collaboration with some of UK s most renowned Institutional and Angel investors. Having worked on both sides of the fundraising process, and now as Head of Investor Success, Todd works to foster collaboration between Institutional, Angel and Retail investors helping great 33 businesses to grow. Industry

34 cubed - Industry trends for 2017 Industry Trends for 2017 As we hit the halfway mark of 2017, I took some time to reflect on what trends we ve seen in the industry, and which sectors have snapped up the most investor interest. Looking at investment statistics across the Financial and Biotechnology sectors, investor returns and institutional co-investment partners, I distill what has and is currently shaping the future of equity crowdfunding. Financial Technology Unsurprisingly, this is the sector that has arguably attracted the most interest on Crowdcube, with an above average funding success rate of 66.8% over the last 12 months 1. Considering a large proportion of Crowdcube members work in financial services, this would naturally lead us to think both understanding, knowledge and value-add would sit at its highest within the sector. Europe quarterly financing trends to VC-backed fintech companies Q Q1 17 Industry As reported by CB Insights 2, Europe saw a surge in FinTech investment in Q1 17, which is especially interesting when you consider a downward trend in the US over the same period. 34

35 cubed - Industry trends for 2017 US quarterly financing trends to VC-backed fintech companies Q Q1 17 It would appear that fears around Brexit and the effect on these companies passporting rights hasn t dampened the UK s / Europe s dominating position in the sector. At Crowdcube, this year was marked by another record-breaking campaign from crowdfunding darling Monzo Bank, as they raised the largest co-investment round we ve seen so far (with the participation of NYbased Thrive Capital, Passion Capital and Orange Digital Ventures), with a 22m Series B and 2.5m allocation to the crowd. This now values the start-up at a staggering 84m (post-money). FreeTrade, the UK s answer to RobinHood (US), raised a whopping 1m while still in beta. Backed by the Octopus Ventures accelerator, and with over 1,400 potential users on the waiting list, they had previously raised a 150k SEIS round on Crowdcube a year earlier. Additionally, with Crowdcube alumnus Revolut growing at an very impressive rate (last reported to have over 550,000+ users 3 from 200,000 users at the time of raise) the space is looking bright for investor returns. Industry 35

36 cubed - Industry trends for 2017 Biotechnology The inherent complexity and technicality involved in biotechnology has meant that traditionally, these ventures have rarely turned to crowdfunding platforms to raise investment. However, some exciting developments may see this change. Indeed, Celixir (previously Cell Therapy), a biotech working on stem cell research made the headlines a couple of months ago, as they provided a 2.7x return for early investors as part of a secondary share transaction. With Sir Martin Evans a Nobel Prize recipient on the board, they were one of the very first biotechnology firms to raise investment on Crowdcube in 2014, a funding round totalling 689k. Interestingly, the first crowdfunded startup to provide a return in France, Antabio, followed a same path, providing a 1.4x return for early investors as part of a share buyback. These success stories, combined with a 100% funding success rate 4 for Healthcarerelated companies on Crowdcube so far in 2017, should quite naturally see an increase in companies raising with us, industry partnerships and ultimately further returns for investors. The rise of corporate venturing So far this year the largest amount raised was from Vita Mojo, an ultra-personalised quick service restaurant chain and technology company changing the way people consume food. They successfully reached a colossal 3.27m of crowdfunded investment in June. This was the largest amount raised in a single equity crowdfunding campaign by any company in the UK this year 5. What s worth noting here is the increased prevalence of corporate venturing investing alongside the crowd Elior PLC, a publicly listed global catering player, led Vita Mojo s round with a 1m check. This follows the success of Aviva Ventures, who backed home security camera firm, Cocoon ( 2.4m) and hardware company, PitPat, hailed as a fitbit for dogs. As a result of their campaign they attracted investment from RSA, the insurance giant, and Neovia, a 1.6bn turnover global player in nutrition, animal health and pet food. Industry 36

37 cubed - Industry trends for 2017 The association between corporate venturing and crowdfunding makes a lot of sense. On one hand, the crowd validates the consumer proposition for these behemoths that may fail to appreciate true customer demand. On the other, the corporate backing validates the valuation, market potential and viability for non-sector specific crowd investors. Having worked alongside most of the UK s top tier VCs and now several well-known corporate venturing arms, this year should truly mark the shift of equity crowdfunding as alternative finance to quite simply an investment marketplace model. These are exciting developments for everyday, sophisticated, corporate, institutional and high net worth investors alike bringing a further meaning to the wisdom of the crowd. Contributor Emilien Hoet Senior Equity Fundraising Manager As a Senior Equity Fundraising Manager at Crowdcube, Emilien mainly works with growthstage businesses and has specific interest within the MedTech/BioTech sector. He has personally helped raise over 20m for 44+ businesses including GoHenry ( 4m) which was the largest equity crowdfunding raise for a private company in the UK at the time and Molecular Warehouse ( 740k), currently the largest BioTech raise on platform. A Londonborn Belgian, Emilien is fanatic about craft beer, runs the occasional marathon and is fluent in French & Spanish. Industry 37

38 cubed - Crowdcube 38 Crowdcube

39 cubed - Crowdcube An overview of the latest Crowdcube news and milestones, including amassing a community of over 400,000 that have helped fund over 500 businesses on the platform. 39

40 cubed - Crowdcube turns six Crowdcube turns six We celebrated our 6th birthday with some of our shareholders, friends and Funded Club businesses a few months ago and we re delighted to announce the winners, which were voted for by the crowd. The first award of Entrepreneur of the Year went to Tom Blomfield, cofounder of Monzo. Tom was one of the original GoCardless founders and launched Monzo just two years ago. The second award also went to Monzo for Best Crowdfunding Campaign of the Year, after Monzo triumphantly raised 1m in just 96 seconds. The third award of the evening, Industry Innovator of the Year, was handed to Molecular Warehouse. This business is disrupting healthcare with its biosensor technology designed to enable people to monitor their health using their smartphones Crowdcube The final award of Best Funded Business goes to Sugru. After competing against the likes of BrewDog and gohenry, Sugru is still a favourite of our investors after raising 3.4m back in

41 cubed - Crowdcube turns six Crowdcube 41

42 cubed - Crowdcube turns six Crowdcube 42

43 cubed - Crowdcube turns six Crowdcube 43

44 cubed - Crowdcube data The latest Crowdcube data Overview ( ) 322,000,000 Successfully raised 540 Successfully funded businesses 410,000 Registered investors Top 3 Sectors Crowdcube Technology Internet business Food and drink 44

45 cubed - Crowdcube data 27% Female 73% Male Investor gender split Top 3 investment portfolios by # businesses 1,802 Avg. investor portfolio amount 1,000,000 Largest single investment 4,110,024 Avg. amount invested per month 2,915 Avg. no of investments per month Crowdcube 45

46 cubed - Crowdcube ios app v2.0 Browse and invest on your ipad with the Crowdcube ios App v2.0 We launched the Crowdcube ios App in late September of last year, and since then we ve been delighted with the response from our investors. Over 4m has been invested into opportunities on Crowdcube using the app, with individual investments of up to 100,000. We ve also introduced a number of new features, including access to your portfolio, TouchID authentication of investments, 3D Touch quick actions, and Handoff support. We ve also been talking and listening to our investors about how they use the app, and what opportunities exist for us to improve the experience for them. One common request we have heard is to support the ipad with a fully adaptive experience. The iphone is a great device for receiving notifications about new opportunities, and reviewing those opportunities, but a larger screen can be helpful when performing more detailed due diligence. Crowdcube 46

47 cubed - Crowdcube ios app v2.0 In response to this, we ve released v2.0 of the Crowdcube ios App to the App Store. The v2.0 app offers full support for all sizes and orientations of ipad, including support for Split View and Slide Over. We ve also taken the opportunity to make a number of other improvements to the user experience in response to user research and feedback, including: A simplified navigation system and single screen Opportunity view A new Discover screen with filters for followed and archived opportunities A unified Portfolio view for quick access to both current and historical investments Dynamic Type support, which ensures the app respects your type size preferences in ios Settings 1Password support To accompany this release, we launched our new ios investor's community: The community allows you to engage with the Product, Design, and Engineering team behind the Crowdcube ios App, as well as other Crowdcube investors using the app. We ll also be sharing updates on our roadmap for the app, and opportunities to participate in our user research events. We d love to hear your feedback on the Crowdcube ios experience, and your suggestions for improvements that would make the ios app more useful for you. Crowdcube 47

48 cubed successful raises on Crowdcube 500 successful raises on Crowdcube Crowdcube We re pleased to announce that we have now funded over 540 raises on Crowdcube. This comes after a great 2017 so far, where 27m was invested through the UK platform, 23m successfully invested and, thanks to the backing of the crowd, 10 businesses raised over 1m, three of which were over 2m. 48

49 cubed successful raises on Crowdcube These businesses include: GripIt, Wild Beer, ME+EM, Cocoon and Cauli Rice. Let s also not forget Monzo, which recently returned to Crowdcube and Ben s Canteen that tipped us over the 500 mark. Crowdcube 49

50 cubed - 50th raise to top 1m 50th raise to top 1m We have now completed over 50 raises of 1 million or more. Half of the ventures involved have been backed by institutional or venture capital (VC) investors alongside the crowd. Cauli Rice, which closed its latest funding round on Crowdcube after raising 1.4m from 1,038 investors, became the 50th million pound raise as the business seeks growth capital to begin exporting its award-winning products overseas. The amounts being raised on Crowdcube climb ever higher as crowdfunding becomes established and attracts more growth stage, often VC-backed, businesses. In 2013 just two pitches raised over 1m (Hab Housing and Crowdcube), while in 2016 there were 17; including British fintech pioneers Monzo and gohenry, as well as BrewDog, the UK s largest craft brewer. The surge in venture-backed businesses raising finance on Crowdcube illustrates how dramatically the funding landscape has changed in recent years and how crowdfunding, which greatly complements traditional sources of finance, is now the predominant way of raising finance in the UK. Crowdcube 50

51 cubed - 50th raise to top 1m Crowdcube 51

52 cubed - 400,000 members We re now a community of over 400,000 members! After celebrating our sixth birthday in February, we have now achieved another major milestone: 400,000 members! Undoubtedly without our members, we would not be where we are today, so we want to extend a huge thank you to each and every one of you. Crowdcube 52

53 cubed - 400,000 members To date, a total of over 300m has been invested through the platform. We ve completed over 500 successful raises, helping businesses to create thousands of new jobs and open offices, shops, bars, restaurants, fitness centres and much, much more. You can find out some Funded Club milestones at Crowdcube 53

54 cubed - Product update Product update Crowdcube ios App Over 4m has been invested into opportunities on Crowdcube using the app, with individual investments of up to 100,000. We ve recently released v2.0 of the Crowdcube ios App to the App Store. The v2.0 app offers full support for all sizes and orientations of ipad, including support for Split View and Slide Over. We ve also taken the opportunity to make a number of other improvements to the user experience in response to user research and feedback, including: Notifications We ve recently released personalised notifications to the Crowdcube website to make it easier than ever to keep you informed about the businesses that you re most interested in. Each day there is plenty of activity on Crowdcube, but until now it hasn t been easy to find or keep track of these updates outside of your inbox. Notifications bring together everything you need to know since you last visited Crowdcube in one location. A simplified navigation system and single screen Opportunity view A new Discover screen with filters for followed and archived opportunities A unified Portfolio view for quick access to both current and historical investments Dynamic Type support, which ensures the app respects your type size preferences in ios Settings 1Password support Crowdcube 54

55 cubed - Product update Explore We launched the Crowdcube content hub in March to give you a destination to explore the latest news, hints and tips on investing, raising finance, the industry and give you the opportunity to keep updated with your investments through the Funded Club. Explore is a place where you can browse the relevant categories, most popular content and interact with the articles, videos and podcasts by commenting, sharing on social media and with friends via . Help Centre We revamped our Help Centre; a place where you can find an answer quickly and effectively. Your top 5 FAQs are: Raising finance through equity Making an equity investment How many exits have there been from equity investments made through Crowdcube? How can I make a return on my investment? What is overfunding? If you have a question or need a definition, this is the place to go. Crowdcube 55

56 cubed - Partnerships Partnerships Co-Funding The average Crowdcube funding round combines investment from a variety of sources. Retail Investors, Angels, Venture Capitalists, Family Offices and many more invest alongside the crowd to support great British businesses. Co-funding in this way is becoming an increasingly common and powerful model of investment. It gives investors access to a broad range of innovative high growth technology businesses with the added reassurance that they are investing alongside some of the UK s best investors. Here are a few examples of some of the prolific Funded Club co-funded investment rounds that took place on Crowdcube: Crowdcube 56

57 cubed - Partnerships Community We are connecting, working, and forming genuine relationships with high-potential founders in startup hubs that are hungry to grow, ready to scale and have the appetite to amplify their brand. We will empower our partners to make sure the founders are better educated about investment through bespoke support and curated programmes. We recently launched our Community of Venture Disruptors. What is Venture Disruption? It s about investor collaboration and disrupting the idea that only one route of venture can be taken in a capital raise. Our community has been built to make it easier for startups to navigate this tough terrain of raising capital. With seventeen partners, this community already represents at least 20,000 people and its membership is growing fast. These founders will then benefit from discounted fees when they successfully close a round on Crowdcube. We believe in the ability of founders to challenge the status quo, raise through a matrix of funds, and embrace the proven virtues of #venturehacking - the art of finding more innovative mechanisms to raise finance. Crowdcube 57

58 cubed - Partnerships Affiliate Crowdcube has partnered with national networks of introducers, including brokers, accountants, consultants, advisers and investors. This is to encourage expansion of services, whilst being able to offer clients an innovative service, plus earning commission for all successful referrals. Kirsty Ranger, CEO Ideas Square, Crowd10 Jonny Young, Strategy Director, Startups.co.uk Kweku Ackom-Mensah, Head of Partnerships, Grant Tree Working with Crowdcube to build our Crowd10 programme has been a pleasure. Together, we ve supported multiple companies in successfully raising investment and we look forward to supporting many more. Crowdcube featured on Startups. co.uk as a Just Started business back in 2011, so we are delighted to now be working together to give today s ambitious businesses increased opportunities for profile and investment. Crowdcube s knowledge of crowdfunding offers a valuable point of reference and a viable source of funds for many of our clients. With their highly complementary service offering, it is a partnership that we are excited to grow by working closely with the Funded Club. Crowdcube 58

59 cubed - Partnerships Growth Services Growth Services is a marketplace of curated and relevant services that are trusted, transparent, market-leading and exclusive to the Funded Club and companies raising finance on Crowdcube. We ve created the Growth Services network to provide our entrepreneur community with more information on how our partnerships can benefit businesses with news, services and exclusive offers that will be continually added from our trusted partners. Our services are tailored to help companies access finance and get business ready from supporting growth, after raising finance. Our partners include the likes of KPMG, G by Grant Thornton and Amazon Launchpad, as well as Funded Club businesses and so much more. All partners are dedicated to helping businesses succeed and are offering everything from the preparation of a crowdfunding campaign to providing marketing opportunities, financial and recruitment services. The Growth Services network is free for Funded Club members and reduces risk, time and cost, through offering curated, trusted and reviewed services. Crowdcube 59

60 cubed - European expansion with WeWork European expansion with WeWork We re set to expand our operations across Europe through a partnership with co-working giant, WeWork. As you may know, we already operate In Spain dominating the region. We will be using WeWork s existing European footprint to open offices in Paris and Amsterdam in June and July, with further openings across key European cities and beyond planned for the future. Our expansion plans are being driven by three factors: an increase in demand from European start-ups seeking growth capital in the UK, a growing number of European-based investors investing via the platform, and UK investors looking to diversify their portfolios beyond the UK to gain broader investment exposure. You can read more about this partnership at Crowdcube 60

61 cubed - European expansion with WeWork Crowdcube 61

62 cubed - Funded Club 62 Funded club

63 cubed - Funded Club The latest news and insights into our ever-growing network of businesses to fund on Crowdcube. 63

64 cubed - Mettrr Technologies Mettrr Technologies First on-platform secondary share trade Mettrr Technologies has become the first company to provide financial returns for its crowd investors through a secondary share sale on Crowdcube. It comes just six months after we announced that Crowdcube would pioneer secondary liquidity on the platform, delivering on our mission to help investors realise their investments. Investors, who backed the tech startup in 2012 on Crowdcube, received a 9x return on their original investment after angel investors acquired a stake in the company. Following the transaction, 10 investors collectively realised 50,000 in Mettrr Technologies, previously GetSiteTracked.com. Two further investors realised 250,000 in an off platform transaction. 100,000 successfully raised 29 Investors Funded club Since raising 100,000 on Crowdcube in March 2012 from 25 crowd investors, the company has developed a market leading artificial intelligence software that builds DIFM (Do It For Me) websites for small business owners in seconds. Whether it s through large white label partnerships or using wholly owned brands such as SoleTrader.com, Mettrr Technologies then connects these small business website customers with deals and supplies that they need to complete jobs that are generated from their own site. Recently, the firm partnered with Crazy Domains - Australia s largest domain provider. 12/03/12 Date of Crowdcube raise 64

65 cubed - Mettrr Technologies It is this technology IP that has garnered interest from institutional investors and enabled Mettrr Technologies to secure 1 million investment in Sebastian Lewis, founder of Mettrr Technologies, said: Getting the business to where we are today wouldn t have been possible without our early crowd investors. I m delighted to give those investors the option of a healthy return on their investment but I m also pleased that 17 of the original 25 crowd investors want to stay with us for the next part of our journey to global expansion; I look forward to providing further liquidity events in the future. Delivering a return for shareholders is the ultimate goal for any high-growth business and its investors and Crowdcube has led the way in delivering more exits and returns in equity crowdfunded businesses than any other UK platform. We ll continue to look to facilitate investor returns through secondary trading for businesses that are maturing as well as working with more established and venture backed businesses. Paul Hale, a professional investor and an early shareholder in Mettrr Technologies, said: I invested 45k in two rounds in the start-up because I knew that, as an entrepreneur, Sebastian would have the drive and determination to make a success of it. Mettrr has evolved over time and its value now lies in its technology, widening its opportunities. I am delighted that I have been given the chance to trade some of my shares and make a tidy profit while keeping a portion invested so that I can see the business through the next stage of its development. Funded club 65

66 cubed - Brewdog is valued at 1bn BrewDog is valued at 1bn Crowdcube s first unicorn Back in April this year, BrewDog was valued at 1bn and TSG Consumers, one of the world s leading growth funds, has acquired approx. 23% of the company in a 213m transaction. Making this Crowdcube s first Funded Club unicorn. BrewDog, which is one of the UK s fastest growing food and drink brands, has raised a total of 13.13m on Crowdcube via both equity and bonds. Its latest round on the platform saw over 2,700 people invest 10m in just three weeks, adding to the company s investor community of more than 55,000 people (including 46,000 Equity Punk investors from across the globe).. 13,130,000 successfully raised Funded club James Watt, co-founder at BrewDog, commented: We are growing mega fast at the moment. We have broken the record for most consecutive years on the Sunday Times Fast Track 100 and in 2017 we are forecasting our growth will be even faster. We recently shared our ambitious 5-year plan with our Equity Punk shareholders, which included adding more capacity in Ellon and Columbus as well as building new breweries in Asia and Australia. All of these projects are immediate opportunities and they all link completely back into our core mission of making other people as passionate about great craft beer as we are. This deal will enable us to take our business, and our community s investment in BrewDog, to the next level. 4,586 Investors 02/12/16, 06/10/15, 04/10/15 Date of Crowdcube raise 66

67 cubed - Brewdog is valued at 1bn Many investors have seen the value of their shares increase by 2,765%. More about TSG Consumer Partners Based in San Francisco, TSG Consumer Partners is one of the largest American private equity company, that s focused on growth capital investments. The firm has previously made successful investments in global brands like Pop Chips and Vitamin Water. Blythe Jack, Managing Director at TSG Consumer Partners commented: BrewDog is an ideal fit for TSG s mission, which is to partner with visionary founders building next generation consumer brands. The company is truly a pioneer and leader in the rapidly emerging international craft beer market. We look forward to working with BrewDog and its founders as it continues to innovate, expand and harness a unique rebellious energy. Funded club 67

68 cubed - Celixir delivers 2.7x return Celixir delivers 2.7x return Another return for Crowdcube investors, after innovative biotech firm Celixir offered its backers an opportunity to realise a proportion of their initial investment. Celixir is the seventh Crowdcubefunded business to deliver returns, with a share buy-back that has provided investors with a 2.7x return on the original investment they made in This brings the total amount now returned to Crowdcube investors to over 5 million, through equity exits and bond interest repayments. Celixir will use the shares it has purchased to fuel growth by attracting and incentivising new talent. Formerly known as Cell Therapy Limited, Celixir discovered and developed Heartcel, a medicine that treats heart failure by regenerating cardiac muscle. In 2014 it raised 691k on Crowdcube - 176% over its target - from 300 investors in just 10 days. All investors were offered the opportunity to sell their shares. 18% opted to sell shares, with 82% keeping their money in the business, which hopes to go public in the future. The Cardiff-based company is now valued in excess of 200m, triple the valuation it was given at the time of its pitch on Crowdcube. 689,250 successfully raised 297 Investors 01/12/14 Date of Crowdcube raise Funded club 68

69 cubed - Celixir delivers 2.7x return It s truly impressive that Celixir is in a position to buy back shares two and a half years after funding on our platform, and once again provides hard proof that crowdfunded companies can deliver healthy financial returns for their investors. The company s valuation increase is testament to the quality of the ventures that pitch on our platform, and also to the wisdom of the crowd, which recognised its huge potential back in Crowdfunding continues to mature. Not only has Celixir s share sale provided investors with liquidity, but the fact that so many of them chose not to exit illustrates the confidence crowdfunders have in the long-term growth of the businesses they back. Co-founder of Celixir, Ajan Reginald, says: Our mission is to develop life-saving medicines. We hope these medicines will be available to everyone in need and so we believed it was important to give everyone the opportunity to invest through Crowdcube in 2014, since which our value has tripled. We believe it is only right to share this opportunity with all shareholders, although only 53 of our 300 Crowdcube investors decided to sell shares which is a very positive sign of the confidence they have in our business. Ajan Reginald founded Celixir in 2009 to experiment with progenitor cells as a way of repairing damaged heart tissue. His co-founder is Professor Sir Martin Evans, whose pioneering stem cell work earned him and his team the 2007 Nobel Prize for Medicine and Physiology. The money raised on Crowdcube in 2014 has enabled Celixir to develop and manufacture HeartcelTM, and move closer to treating the patients who need it. It aims to treat 100,000 critically ill patients within the next five years. HeartcelTM is scheduled to launch commercially as early as 2018, into a global market for pharmaceutical heart failure treatments worth an estimated US$10bn. Celixir also has other developments in the pipeline, including TendoncelTM, a topical medicine that repairs severe tendon damage. Funded club 69

70 cubed - Farmdrop Farmdrop: Where are they now? Farmdrop is an online grocery platform that uses a mobile app to link producers and customers directly. By cutting out the middleman, Farmdrop pays producers 75 per cent of the final retail price, roughly double what they would receive from the supermarkets, while customers get access to the freshest food which is harvested to order. This is your second round of follow-on investment since your Crowdcube raise in 2014, what has the investment to date helped you achieve? Farmdrop has come a long way since the Crowdcube raise. It was that first investment and the subsequent seed round that has enabled us to dramatically improve the offering to both our customers and farmers on the platform. In the last year and a half, we have moved exclusively to door-todoor delivery, upgraded the customer app and producer s portal, and brought our fleet in-house. In March this year, we launched next day delivery which enables us to compete directly with the supermarkets. 748,880 successfully raised 351 Investors 22/07/14 Date of Crowdcube raise Funded club 70

71 cubed - Farmdrop You ve just raised 7m from Atomico, could you tell us a bit more about this? Atomico led the Series A investment round on Farmdrop s behalf and with this latest investment, and the new expertise on board, we can dramatically improve the customer experience, and start to expand to other cities across the UK. Commenting on the raise, Niklas Zennström, co-founder of Skype and CEO of Atomico, says, Atomico likes to invest in companies looking to tackle some of the bigger sustainability challenges our planet is facing. That is why we re incredibly proud to have led Farmdrop s second investment round. They are deploying innovative technology to simplify the food chain and meet the growing demand for more sustainably sourced, local food. We re excited about helping them achieve their ambitions for new hubs across the UK and improving the overall customer experience. Other new investors in this round include Nigel Wray, businessmen and chairman of Saracens Rugby club. Nigel joins existing investors Alex Chesterman, the founder of Zoopla Property Group, and founding Farmdrop investor Quentin Griffiths, the co-founder of Asos. Funded club 71

72 cubed - Farmdrop In 2014, on your Crowdcube pitch, you mentioned that online food sales were set to top 17bn by 2019, is this still the case? How has this impacted your business? The size of the grocery home delivery market is still accelerating. Total spend is estimated to reach 18 billion by 2021 versus 10 billion today. Moreover, the average amount families spent on food shopping online has increased by a third in the last year alone. Farmdrop is well placed to take advantage of this growth in online food shopping. The real beauty of our model is that we can deliver groceries to your door that are of a far superior quality to anything you would get in the supermarket but with the same level of convenience and comparable prices. Do you think people s behaviour to sourcing local food has changed since you launched FarmDrop in 2012? There is no doubt that more and more people are starting to understand the link between the type of food they eat, the way it has been produced, and how it affects their overall health. Sales of ethical produce have increased year-on-year since 2007, and when asked, people tend to have much higher levels of trust in their food if it has been sourced locally. Funded club 72 What Farmdrop offers (and no supermarket can match) is unrivalled information on the provenance of our food - how it is grown, picked, and then transported to the customer s door.

73 cubed - Farmdrop How is your business performing against your projections in have you hit any challenges along the way or changed direction? The Farmdrop of 2014 is very different to Farmdrop in Of course, like any start-up trying to disrupt a very competitive sector, we have faced some challenges. But what we have learnt since the first Crowdcube raise is that convenience is king. You can t just shout about your ethical credentials and then expect people to change their behaviour. You have got to give them a product which is much better than the one they are already using. That is why we dropped the click-and-collect model and moved exclusively to door-todoor delivery in Since then, sales have increased by 600% and earlier this year we reached annualised revenues of 3 million. What s next for FarmDrop? Farmdrop will be using the money from this raise to take the online and offline customer experience to the next level, improve the inventory management system for our farmers, and open new hubs across the country with the Bristol launch in September As our HQ is based in the countryside we love sourcing local ingredients, can you tell us what s seasonal at the moment and share one of your favourite recipes? Well, it s the beginning of May and so British asparagus season has just arrived. You should try our Springtime risotto recipe on our website Funded club 73

74 cubed - Seadog Productions Seadog Productions The moment that turns a crowdfunding campaign from a speculative venture into an irresistible force, is the point when you begin to genuinely believe that you - as an entrepreneur - offer something unique. As a chap of a certain age, and somewhat new to crowdfunding, I initially struggled to overcome the sensation that I was simply asking people for their money to develop a personal dream. The reality is that any new crowdfunding venture, particularly an equity based fundraise, is simply a chance for potential investors to be part of an exciting new company. Once this had painstakingly been explained to me by the good folk at Crowdcube, and I began to genuinely see the opportunities for growth for Seadog Productions, it gave me real confidence to drive the process hard. I became positively giddy with it, the knowledge that if this went well, we would be a community of investors that had begun something special. As is the way of these things, I had a few meetings with potential shareholders who - as is their right - said that they wouldn t be coming on board. Far from feeling downcast, I actually felt sympathy for them as I walked away - You re missing out pal being very much the mindset by this stage. This change in approach was critical for me, and gave real momentum to the project and the process. Funded club 74

75 cubed - Seadog Productions Mind you, every day was a school day. The Crowdcube community are no fools, and they certainly do not throw their money away. As such there were many, many questions on the forums, and very few of them were easy. Learning how to say I don t know, but I ll find out (and then finding out) was one of the first and most important lessons. Engaging with the occasional cautious investor, as well as exchanging s with highly knowledgeable experts who were interested but had a question or two, became my day to day life for the month of the raise itself. But it was also a strangely compelling and highly enjoyable activity, scrambling up the learning curve of crowdfunding etiquette. It was though, a very positive experience. If you are raising money through this means, you are entirely at the mercy of the community, and I m happy to say that I found the vast majority supportive, engaged, generous with their advice, and unselfish in their praise of our efforts. The end result was a goodly sum, a triumphant signing off of the campaign, and the positively galvanising sensation that we now had to justify the considerable faith that had been shown in us as a company. The fact that you have several hundred people who have invested their hard earned cash gets you out of bed in the morning with a rush akin to twelve espressos. Guest contributor Monty Halls, founder of Seadog Productions Monty has been involved in fourteen television series as either presenter or producer. He has worked with the BBC, Channel 4, Channel 5, ITV Westcountry, The Discovery Channel, National Geographic, and the History Channel. He has won two internatonal awards for his work presenting Great Barrier Reef for the BBC, and has been nominated for three RTS Awards, and a Panda at the Wild Screen Festival. He has a suite of further productions which are awaiting development. Funded club 75

76 cubed - Disarmco Disarmco Arpana Gandhi, founder of Disarmco, which raised just shy of 150,000 with 124 investors in early 2014, appeared on the panel at the Guardian Small Business Network s Confessions of a Small Business Event in February. DisarmCo enables the disposal of landmines in a simple, cost effective and environmentally friendly way. At the event Arpana discussed her struggle to find investment, almost going bust and battling to save lives. A big contract with the UN was a turning point for the company, which now works with a broad range of clients. Along the way Arpana has experienced her fair share of challenges, I ve done things the right way and I ve done things the wrong way. Each experience is a learning curve. But if you have a passion for something, don t give up. Know that at some point, somewhere, somebody will help you. Funded club 76

77 cubed - Hop Stuff Brewery Hop Stuff Brewery After launching in late 2013 following a successful crowdfunding campaign, Hop Stuff Brewery returned to Crowdcube late last year to complete another funding round, raising more than 744,000 with the support of 563 investors. In the three years between the two funding rounds, the company s brewing capacity grew 400% and Hop Stuff now aims to become one of London s biggest independent brewers. Hop Stuff s new site, which they will soon be moving too, will be able to increase brewing capacity to 1,000 kegs a year. Founder James Yeomans has said that Crowdfunding acted as validation for us in a shared vision for the UK craft market (...) I think the success of the crowdfunding campaign was based on a shared belief for the future of London and UK craft beer. Opening the market up to 90% of beer drinkers that are yet to really appreciate how amazing craft beer is. Funded club 77

78 cubed - Funded Club Funded Club Featured in Startups 100 best businesses of 2017 Startups 100, the longest-running index of the best new businesses, has just released their list for These companies collectively employ over 2,000 staff with average turnover of 1.64m, and unsurprisingly, 11 of our fantastic funded companies are featured. We are really proud of what these companies have achieved, so here s a brief insight into each of them. The Yorkshire Meatball Company, which strives to lead the fight against average, tasteless meatballs, raised over 123,000 in April 2016 with the support of 220 investors. Following a pivot in the direction of the business, it is now stocked in over 200 stores including Morrisons, Tesco and Asda across Yorkshire, London and the South-East. This is the third consecutive year the company has been featured in the Startups 100 list.critical for me, and gave real momentum to the project and the process. Synap, which raised 195,940 from 140 investors in October 2015, uses scientific insights into how the brain works to enhance the way students learn. Its award-winning mobile app and website have already attracted thousands of users from across the world who rely on Synap s intelligent algorithms to learn more in less time. Funded club 78

79 cubed - Funded Club Tutora recently completed their second round of funding in March this year, raising just under 705,000 from 540 investors. Tutora is an online marketplace that intelligently connects tutors to students via their best-match algorithm. Growing by 700% since its initial 150k Crowdcube raise in April last year, Tutora now has over 6,000 tutors and aims to become the largest tuition company in the UK. iolight completed its second raise in March 2017, raising 319,750 from 333 investors. The company has invented a high resolution portable microscope which displays images directly onto your tablet or mobile phone. 48 iolight microscopes have been sold to date to customers including multinational pharmaceutical company Bayer, Cambridge University, the Eden Project, and the Royal Veterinary College. Following on from their record-breaking first raise, Monzo completed their second crowdfunding campaign in April this year, raising 2.39M from 6,484 investors. Monzo, the digital challenger bank, recently announced that it is now a fully authorised, unrestricted bank, and now has 200,000 customers who have collectively spent a staggering 250,000,000 through the app! Funded club 79

80 cubed - Funded Club Back in October 2014, Pip & Nut raised 120,000 from 81 investors. The company makes a range of nut butters which capitalise on the growth in consumer demand for natural, sugar-free, protein rich food. The products are now sold in over 3,000 stores, and it has also caught the attention of a number of top customers and brands including Chelsea Football Club, LEON and Pret a Manger. In October last year, ed-tech business Azoomee raised over 796,000 with the support of 390 investors, and overfunded to 176%. Azoomee is a safe app for primary-aged children where they can watch, play, listen and get creative in one secure place. The app is preloaded onto O2 s Family Tablet and the company is a strategic partner of the NSPCC. Achieving a massive overfunding figure of 366%, Cauli Rice completed their fourth raise in April this year, with 1.47M raised from 1,009 investors. Cauli Rice is a low calorie, low GI Rice Replacement. It has 80% fewer calories but with the same taste and satisfaction as ordinary white rice and is already being supported by industry experts. It is now stocked with Tesco, ASDA, Waitrose, Sainsbury s, Wholefoods and a range of independent stores. Funded club 80

81 cubed - Funded Club In July 2015 Cornerstone, which has now featured two years consecutively in the Startups 100 list, raised over 876,000 from 229 investors. The company makes it simple for men to have a smooth, comfortable shave by delivering high quality razors and shaving supplies on a flexible, personalised schedule. Cornerstone now has over 110,000 customers in the UK. In September 2015, ZigZag Global raised over 124,000 from 116 investors. By linking together retailers with warehouses and couriers, ZigZag can distribute products to where the demand is, and resell locally without the need to ship goods back around the world. ZigZag is now used by a number of high profile companies including Topshop, Dorothy Perkins, Evans, Burton and Selfridges. Floom, an online marketplace allowing consumers to buy beautiful flowers from independent florists, recently completed a 520,000 funding round with the support of 334 investors. Backed by the founders of New Look & AMC Fresh; Floom want to do for flowers what Deliveroo did for takeaway. Floom has already amassed a list of highprofile customers including the BBC, Jamie Oliver Ltd, ITV, News, McKinsey, King, Conde Nast and Hearst. Funded club 81

82 cubed - Cubers In the cube Hear what the Cubers have to say Becca Lewis: Head of PR and Communications Michael Harvey: Visual Designer I d heard of crowdfunding before joining Crowdcube but when I met some of the team, I was really drawn into what the business was trying to achieve. I loved the idea of helping businesses raise finance to get an idea off the ground or take the next step in their growth. The entrepreneurial culture and team were also big draws from me - it s a fast-paced company and we work hard and whilst it may seem like a cliche, we genuinely have fun doing it. The idea of joining a new startup and help build the foundations for the world leading equity platform intrigued me. I was a Designer at the Met Office - I went from designing clouds to crowds and I have the possibility of growing in my field. Everyday is different! Milena Stoeva: Product Manager Thor Mitchell: Chief Product Officer Crowdcube 82 I was drawn to the idea of making investments accessible to everyday investors and companies relying on their biggest supports to help their growth. I get autonomy and the work is challenging; the office is really laid back; the people here are awesome. Also, I love getting to talk to investors or entrepreneurs and meeting the people we ve impacted. It s important to me that I work on projects I believe have the potential to make a large positive impact. By offering entrepreneurs a new way to raise funds and engage with their audience, I believe Crowdcube is fuelling the growth of the UK startup ecosystem, which lifts the UK s reputation as a source of innovation, supports the UK economy, and creates new jobs. The fact that I could work in a team of this calibre on a product this impactful without having to suffer the stress or expense of living in (or commuting to) London, was the icing on the cake.

83 cubed - Key achievements 2017 Key Achievements: Most amount raised in 2017: Vita Mojo 3.2m Total raised 1,116 Investors Fastest raise in 2017: Fitch Brew 148,280 Total raised 154 Investors Time taken to hit target: 26 hours Largest investor community in one raise: Monzo 2,4m Total raised 6,485 Investors Businesses still trading: 94% Total amount returned to investors: million (gross) Key achievements 83

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