UPDATED: Crowdcube is to launch a platform enabling small investors to buy shares in companies going public this summer.
The IPO platform will enable its existing successful fundraises to go public and provide an easy way for the public to invest in fast-growth companies across Europe.
In this way Crowdcube investors will be able to participate in a company’s growth from pre-seed through to IPO.
It is recruiting a team to work with companies and banks on planned stock market flotations.
“We’ve democratised investment into private companies,” Crowdcube said in a message to its investor community. “Now, we want to do the same in the public markets by giving you, our community of investors, a way to invest in Europe’s most exciting businesses at the point of going public.”
Darren Westlake, co-founder and chief executive of Crowdcube, told the Financial Times that the platform had been raising larger sums for later-stage companies “so this feels like a small step”.
Westlake said the group was already talking to companies on potential IPOs, with a focus on the sorts of consumer businesses which would like to open fundraising to their customers.
However, Crowdcube’s move to open up IPO investing to your average investor got a thumbs-down from crowdfunding expert Rob Murray Brown of ECF.Buzz.
Murray Brown said that rather than getting involved in the IPO market, Crowdcube should concentrate on a recent FOS ruling which ordered it to repay an investor £18,000 over an “at best unclear, and at worst misleading” fundraising pitch for Zing Zing, a Chinese takeaway start-up — a decision which could result in the crowdfunding industry being hit by a series of compensation claims.
Said Murray-Brown: “Our people say that the avalanche of similar claims is just beginning. Imagine how that would play out in the IPO market.”
Meanwhile Crowdcube still plans to launch its Cubex “secondary” share sales platform to enable a market for investors to trade in and out of crowdfunded companies.
Numis, the London broker which owns a small stake in Crowdcube, said it would use the platform for appropriate IPOs in the future.
Ross Mitchinson, co-chief executive at Numis, told the FT that Crowdcube “has the right tools and domain knowledge to make retail access to IPOs simple and hugely rewarding for both investors and the listing companies themselves”.
Mitchinson said: “Retail investors are understandably seeking greater access to IPOs. There is strong desire from customers to have a role in their favourite brands’ public futures.”
To date, over 1.1m private investors have invested over £1bn through Crowdcube into more than 1,000 start-ups.
Crowdcube attempted to merge with rival Seedrs this year but the move was blocked by the UK competition authority on the grounds it would restrict competition in a still small crowdfunding market.