Metrics that Matter; why entrepreneurs are choosing Crowdcube

Following the latest crowdfunding market data released by Beauhurst, it’s clear that investors and entrepreneurs are increasingly turning to Crowdcube, particularly first-time crowdfunders of businesses at all stages of growth.

To find out why we’re going to surface the metrics that matter to help entrepreneurs gain a better understanding of what to look for when evaluating a partner to fundraise with.

When talking to businesses about crowdfunding, we’ve identified three key factors which keep emerging:

  1. How much investment is flowing through the platforms?
  2. What are other funded entrepreneurs saying?
  3. There are so many performance stats out there - which ones should I consider when choosing a platform?

Let's take a look at these points one-by-one.

  1. How much investment is flowing through the platforms?

Fully verified data from Beauhurst showed that 35 businesses collectively raised £21.2m on Crowdcube in the first quarter of 2018 and Seedrs, which completed 32 deals that raised £13.7m between them. However, if you focus on businesses crowdfunding for the first time - you can see significantly more are selecting Crowdcube as their preferred platform to raise finance.

Successful investment is the most important metric. It shows how capable a platform is at converting interest from friends, family, fans and customers of a company into investors, as well as engaging the platforms own community to invest.

As well as being named the market leader in the first quarter of 2018, we also topped the charts in 2017, seeing £85.9m invested into 130 businesses, significantly more than any other platform.  

(Source: The Deal 2017, Beauhurst)

This shows that business owners in the UK and Europe are reassured by Crowdcube’s ability to drive significantly more investment than other platform and the positive network effect this creates for all businesses.

Investors benefit from a more extensive choice of investment opportunities, and entrepreneurs benefit from more investors. Without strong network effects, a business’ fundraising is likely to be on an illiquid marketplace - which often equals failure. This virtuous circle is explained in this insightful podcast from Jeff Jordan of Andreessen Horowitz emphasising the importance of network effects for robust marketplaces.  

2.  What are other funded entrepreneurs saying?

We’ve built an enviable network of highly regarded entrepreneurs from a range of sectors and stages of growth. They are keen to refer other businesses to us and happy to reassure other entrepreneurs raising for the first time. We encourage it.

We recognise a founders need for third-party validation and openly encourage and facilitate introductions to help entrepreneurs get comfortable with crowdfunding. Increasingly, founders have executed larger, later stage funding rounds on Crowdcube but have sometimes completed smaller seed rounds on other platforms. They can often provide an impartial feedback loop for others when choosing the right platform to work with.

3. There are so many performance stats out there - which ones should I consider when choosing a platform?

We still get asked by entrepreneurs, who are frustrated and confused by the bewildering array of performance data that are published, to discard the disingenuous, demystify the data and separate fact from fiction.

We’ve worked with third-party researchers, like Beauhurst, to ensure only verified data is published and we pride ourselves on being open, honest and transparent with data to assist entrepreneurs decision making.

This blog post from February 2018 shined a spotlight on overinflated ‘investment’ and ‘deal’ numbers and offered advice to entrepreneurs around what to look for. The importance of cutting through the noise is as vital now as it was when I wrote that blog, in fact, a few founders are referencing it judging by our Q1 2018 performance relative to the rest of the market.

We strongly recommend official reports published by Beauhurst, the leading researcher on the UK’s equity investment market, which has been thoroughly verified before publication. You can view all their reports into crowdfunding and UK equity investment here.

Matt Cooper

Author: Matt Cooper Chief Commercial Officer at Crowdcube

Matt has 18 years expertise spanning the financial services and FMCG sectors among others, along with a passion for disrupting established industries through innovative products and services.