Peer-to-Peer Equity: Crowdcube

With the introduction of p2p lending some lenders wrote that the concept enabled everyone to feel as banker.

Now, newly launched enables any UK resident to feel as venture capitalist for a financial commitment as low as 10 GBP. Investors can browse pitches which usually include business plans and financial projections and sometimes even video pitches.

In return for the investment, investors get shares of the company. For example entrepreneur Daniel Vinson wants to raise 50,000 GBP. He is offering 49% equity in return, meaning investors roughly get 1% shares in return for 1,000 GBP investment. So far 11 investors have pledged 1,200 GBP.

There are 6 entrepreneurs pitching for funding at the moment. Interested investors can answer questions and for some businesses a lively discussion has started.

Crowdcube, founded by Darren Westlake and Luke Lang, launched 2 weeks ago. Crowdcube’s business model is to offer a platform to match entrepreneurs with peer investors and business angels. Costs for entrepreneurs are a success fee of 5% of the funding amount plus legal fees of 1750 GBP for completion of each company investment.  For a limited period they are waiving the 250 GBP listing fee to register as an entrepreneur and add a pitch.

Investors are charged a processing fee by Crowdcube for each transaction equal to the sum of 0.20 GBP plus 4% of the value of the transaction. Continue reading