beauhurst -blog-the-deal

Investment figures defy Brexit gloom

We have seen a strong upswing in investment through the platform since the decision to leave the European Union (EU) last June. While the shock Brexit decision was expected to impact investment decisions among both UK entrepreneurs and investors, we finished 2016 on a high with our best quarter since the platform launched in 2011 and investment has been up 20 percent in the six months following the Brexit vote.

The figures announced ahead of the publication of the latest Beauhurst report, ‘The Deal’, which analyses equity investment in non-listed UK companies, show that investors’ appetite for backing innovative and exciting businesses continues despite Brexit.

We will be celebrating our 6th birthday this month, continue to break industry records, including BrewDog’s latest crowdfunding round, which saw the company raise £10m on the platform in December – the largest raise to date. This brings the total amount invested on Crowdcube to £210m.

Over our six-year history, Crowdcube has seen a number of changes in investment behaviour on the platform:

  • Successful investment through the platform was just £2.2m in 2011, but last year was almost £80m.
  • Nine businesses broke the mould and funded on Crowdcube when it first launched in 2011, but 2016 saw 121 businesses raise money on the platform.
  • The average raise for a business was £239k in 2011, but in 2016 it was £642k.
  • The size of the largest funding round has gone up tenfold in six years to £10m in 2016 (BrewDog).
  • London, the South West and South East maintain the top 3 regional slots for funded businesses, but the North West is rising up through the ranks, thanks to the Crowdcube North office.
  • The Crowdcube investor community has grown to over 340,000 from just 8,000 in 2011.
  • Investor returns have topped £5m, with exits including Camden Town Brewery, E-Car Club and Wool and the Gang and via regular bond interest payments from the likes of Eden Project and River Cottage.

Brexit may be the word on everyone’s lips, but investment through Crowdcube over the last six months has been vibrant, with crowdfunding records being broken in terms of the size of investment rounds and the speed at which companies are funding. While the Government tackles the economic and political outfall of the decision to leave the EU, we believe British businesses are becoming more attractive to investors right now, particularly with the country’s reputation as a centre of excellence for fintech and other highly disruptive startups.

However, the Government needs to stop paying lip-service and step up to support entrepreneurs more. Announcing £400m of funds last year was a start, but limiting this investment to traditional VCs fails to recognise the influence that crowdfunding has had, and will continue to have, on growth businesses in this country.

As the crowdfunding industry continues to mature, Crowdcube has also seen a trend for more co-investment, with crowdfunding forming part of a larger investment round alongside VCs and institutional investors, and also a move towards corporate venturing, recently seen with Aviva Ventures’ first investment in smart tech startup, Cocoon.

You can download Beauhurst’s latest report, ‘The Deal’, here.