Crowdcube has become the first regulated crowdfunding platform in the UK to give investors direct shares in businesses as part of its efforts to offer investors more protection.
The platform has been working with the Financial Services Authority (FSA) since December 2011 to come to an agreement.
To date Crowdcube has signed up 28,000 investors and orchestrated £5 million of investment into 36 businesses since its launch in February 2011.
Speaking to GrowthBusiness, Crowdcube co-founder Luke Lang says that the platform has been in dialogue with the FSA since before its was formed so that the regulators were comfortable with what he and fellow owner Darren Westlake were trying to do.
‘Equity crowdfunding is at the leading edge so it took some time to arrive at a situation we were both happy with,’ Lang says.
‘I certainly think that from an investors point of view, they’ll benefit from the Financial Ombudsmen service and the Financial Services Compensation Scheme,’ he says.
‘From our point of view, this is about Crowdcube becoming more mainstream. So far we’ve done a good job of increasing exposure.’
More on Crowdcube’s history:
In response to the announcement that Crowdcube has secured authorisation from the FSA, Lord Young, advisor to prime minister David Cameron, comments, ‘Crowdfunding is a highly innovative and important source of finance for UK businesses.
‘I am delighted to see that the UK financial services industry and its regulators are reacting dynamically to new models of business finance, such as equity crowdfunding, so that the UK can maintain its position as world leaders in this space.’
Young authored a 2012 government report entitled ‘Make Business Your Business – Supporting the start-up and development of small businesses’ and advocated crowdfunding.
Lang says that Number 10 has been very vocal in its support for the funding mechanism. He adds, ‘The tax incentives they have put in place such as EIS and SEIS are really positive for us and other investors.’
For 2013, Lang reveals that while Crowdcube very much has a focus on the UK market, which is its ‘bread and butter’, the platform sees a lot of potential opportunities opening up overseas in areas such as Europe and the US.
