The metrics that matter; successful investment

  • Thursday 9th August 2018
  • by Crowdcube

Accurate data is an incredibly important factor for businesses when it comes to selecting the right crowdfunding platform for their raise. It is good practice for a company exploring the mechanism of crowdfunding to raise investment to research which platforms can facilitate the most investment, as this is a barometer of a marketplace’s maturity and ability to convert interest into investment and ultimately, can have an impact on the success of a raise.

Although every entrepreneur wants to make a fully informed decision based on accurate facts and figures, data can be confusing. Entrepreneurs have rightly been raising questions on performance figures recently quoted by some crowdfunding platforms, so, once again, we attempt to demystify the data to clear up the confusion around some industry data in our series of blogs covering the metrics that matter.

When comparing platform data it is important that the definitions and methodology are consistent to ensure you’re not comparing apples with pears. The easiest way to do this is by checking the data published each quarter by Beauhurst.

Beauhurst is an independent research company that periodically publish data on the UK equity investment market, which includes crowdfunding. In our view, Beauhurst present the clearest picture of the equity crowdfunding market and, as an independent source of data, there is no bias to any one platform. You can read their latest report covering the first half of 2018 here, with the focus on crowdfunding is towards the end of the report.

Beauhurst report on successful investment for crowdfunding platforms by displaying funds that have only been raised via the platform, not investment from institutional investors that has been completed off the platform. This transparent approach prevents any risk of misleading information for a platform’s performance for funds raised.

So, for example, when Monzo secured £71m investment in Q4 2017 from venture capital firms before raising £2,392,020 on Crowdcube, we only counted the £2,392,020 raised on Crowdcube in our figures, not the full amount raised of £73,392,020 (£2,392,020 + £71m).

Other platforms take a different approach. Seedrs, for example, published a blog reporting it had raised £66.2m in H1 2018, which is more than double the £31.3m that Beauhurst reported for the same period. Although this includes 11 international deals, which make up a small percentage of the figure, they also include investment in businesses that was completed off the platform. If we were to adopt that same approach, we could report that we raised £73,392,020 for Monzo, we choose not to for the reasons outlined in the previous paragraph.

If you’re considering a crowd raise, our advice will always be to refer to independent data from Beauhurst. That way you can be assured that the data has been verified and checked and, therefore, provides an accurate picture of what’s happening in the equity crowdfunding sector and the performance of individual platforms.

You can view Beauhurst’s latest report on H1 2018, here. Beauhurst also produces an annual report, The Deal, on equity investment in the UK, which includes a dedicated section on crowdfunding. You can download the 2017 report, for free, here.