Commuters walk past cat posters at Clapham Common Underground station in south west London on September 16, 2016.Creative collective, Citizens Advertising Takeover Service (CATS), a project started by a group called Glimpse, have replaced many of the adverts in Clapham Common Underground station with posters featuring stray cats from Battersea Dogs & Cats Home and Cats Protection, after raising £23,000 from almost 700 people via crowdfunding website kickstarter. / AFP / Jack TAYLOR (Photo credit should read JACK TAYLOR/AFP/Getty Images)
Until very recently, anyone running a private company in the UK would have automatically turned to the private equity or venture capital sectors when looking for their first slice of equity capital. But research just published suggests this conventional route to fund-raising no longer offers the greatest prospects of success; online crowdfunding platforms are now more likely to provide the financing such companies are looking for.
Research agency Beauhurst’s analysis of investments into non-listed high-growth investments in the UK last year reveals that crowdfunding is now outperforming. The two largest platforms, Seedrs and Crowdcube, together accounted for 21 per cent of all such equity investment in the UK last year according to Beauhurst’s research.
Given that these two businesses didn’t even exist six years ago – Crowdcube launched in 2011 while Seedrs came along in 2012 – that’s remarkable. Between them, the two platforms funded more than 250 companies last year, with 45,000 investments from users in these companies’ equity.