How beneficial can a true co-investment approach be for startups?

Back in October, we were thrilled to announce our partnership with Crowdcube. The whole approach was to collaborate; bring our skills together for the greater good of those businesses requiring investment to develop and implement their growth strategy.

At Growth Capital Ventures (GCV), we wanted to bring our expertise, investor networks and access to managed funds to the table where Crowdcube were sitting as one of the leading equity crowdfunding platforms.

We’ve built our online co-investment platform in GrowthFunders, and facilitate raising capital for businesses - but the possibilities of working with Crowdcube were fantastic. Separately we both offer immense benefits to those looking for investment. Together, however, we’re able to provide a solution that in many ways is unrivalled.

And so that’s exactly what we did.

Our first co-investment opportunity in Intelligence Fusion has recently closed out on Crowdcube. Raising £400,000, the pitch entered overfunding in the final days and finished with over a fifth more at £487,800.

We’d worked with Intelligence Fusion to help them prepare for the raise, this included going through GCV’s investor readiness preparation, preparing a robust funding proposition, and co-ordinate a campaign to attract the right investor set. Through this preparation we then went on to raise £160,000 for the second stage of their growth, and collaborated on Crowdcube to secure the remaining £240,000, which came from both Crowdcube’s and GCV’s investor networks.

This alone is an achievement we’re particularly proud of, especially from the point of view of taking a true co-investment approach. However, it becomes even more of an achievement that we love talking about when it’s realised £150,000 of the raise came from an institutional fund. We quite literally had investments into Intelligence Fusion from £10 to £100,000.

Intelligence Fusion is a detailed product, and one that can take a little time to understand fully (on the highest of levels they gather and distribute security intelligence from around the world to help businesses protect their people and assets, with the intelligence regularly delivered quicker than many other sources can do) - but both GCV’s and Crowdcube’s investor bases got it from the off.

Interest was high from both company’s audiences, and we supported the raise as anyone in the equity investment market would tell you to - regular updates, opportunities to engage (in this instance via webinars with Michael McCabe, founder and CEO of Intelligence Fusion) and having a fully responsive and active level of communication.

Combine this with the extensive and varied network of investors on Crowdcube and the end result is clear - awareness of Intelligence Fusion increases, an understanding of their offering improves, and investment into the opportunity (which being EIS-eligible added an extra level of attractiveness to the opportunity for many) takes place.

Co-investment in many ways is an emerging term. On the most basic of levels, it can mean two different parties - such as a retail investor and a professional investor - investing into one opportunity. On a more in-depth level, it can be just like it was here - investments made by many individuals and companies to drive forward the success of a company forming part of the next generation of British businesses.

It’s how co-investment, on paper, should work. It’s how we know it can work. And it’s been fantastic to prove it.

Speaking on the collaboration, GCV’s CEO, Norm Peterson, explained “Our collaboration with Crowdcube is an exciting development for ambitious businesses that need investment for high growth. Now, they can benefit from our advice and mentoring, be introduced to our network of professional and retail investors through GrowthFunders, explore the opportunities represented by some of the funds managed by Maven and also gain access to a huge investor base through Crowdcube - who will not only be shareholders but also committed brand ambassadors. We are confident that this model will be an attractive fundraising option for many growing businesses.’’

And Adam Gillet, Crowdcube’s Senior Partnership Manager, said “We are delighted to be working in partnership with the team at GCV. It fits well with Crowdcube's commitment to be at the heart of the Northern Powerhouse and to support fundraising for talented entrepreneurs in the regions outside the capital, as well as those within it.

We have deployed over £40m of capital into businesses through our northern office, and the partnership with GCV helps us assess and assist an even greater range of companies. GCV's support for entrepreneurs means that by the time they reach us they are in a well-organised position with a clear plan for their equity crowdfunding round.

Our entire approach at GCV is bringing investors together to invest in opportunities we’ve supported and developed. Crowdcube’s is to present equity investment deals to their extensive crowd of investors.

By working together, we’re able to provide something that’s not often seen - a true co-investment model.

And Intelligence Fusion are a perfect example of just how successful and beneficial such a model can be for startups.

Jordan Dargue |  Head of Operations and Investor Relations at GCV

Guest author: Jordan Dargue | Head of Operations and Investor Relations at GCV

Jordan Dargue is Head of Operations and Investor Relations at Growth Capital Ventures. Proactively engaging and supporting private investor networks, Jordan connects forward-thinking investors to growth-focused early stage and established businesses, assisting them with raising finance and supporting their growth.

Jordan has experience of working in both private equity and venture capital businesses, one of which was the north’s leading software house, developing the innovation lab which was responsible for spinning out new businesses.

At GCV, Jordan is responsible for the launch of G.Ventures Investor Club, a private network of both investors and angel investors as well as developing G.Labs, GCV’s innovation unit which uses both technology and strategy to drive business growth.