Crowdcube today announced the launch of a new flagship secondary product, the Direct Community Offer (DCO). The DCO gives later-stage businesses a way of offering early investors a return on their investment while simultaneously giving new investors a chance to buy a stake in a business they believe in.
The product aims to solve the problem of liquidity for early investors, which has been exacerbated by businesses staying private for longer, and represents an exciting next step in the evolution of investment crowdfunding. The Crowdcube competitor Seedrs launched its secondary market product already in 2017, and it seems to enjoy an increasing popularity and adoption among it’s members.
Since Crowdcube was founded in 2011, the London-based crowdfunding platform has helped more than 1,000 raises successfully fundraise. With nearly one million members, a total of €940 million has been pledged through the platform.
While Crowdcube has previously completed secondary transactions involving single investors, such as those of Revolut (20x return) and Brewdog (1.8x return), the DCO now seeks to democratise this process, offering the shares of participating early investors to retail investors. The product will be open to European later-stage businesses looking for alternative ways to create liquidity. It addresses a key trend of companies, like Slack and Spotify, moving away from buzzy IPO listings to direct listings. The DCO connects three sets of stakeholders: entrepreneurs who wish to offer their communities a stake in their business, new investors via Crowdcube’s investor platform, and the current shareholders in the business who want to take up the opportunity to sell shares.
Darren Westlake, CEO and Co-founder Crowdcube stated: “We’re seeing a global trend towards high growth, household names, looking for alternative ways of rewarding early investors with some liquidity, without the burden of going public through a traditional IPO. These same forward-thinking businesses also love the idea of offering their loyal customers the chance to become new shareholders, without the need to raise further investment. The DCO solves this conundrum.”
He continued: “For European businesses looking for a new, alternative IPO track, our campaign-led approach is proven to maximise awareness, engagement and investment from a business’s community, and ours, to ensure early investors get the liquidity they want and as many people as possible to become new shareholders in a business they love. We strongly believe that we can take all the best practice we have developed in participating in 90% of the most popular primary equity crowdfunding raises in Europe and apply that to secondaries.”
Amassing a membership of nearly one million retail investors, Crowdcube is one of the pioneers and leaders in equity crowdfunding. Since lockdown, Freetrade, Moneybox and what3words have all raised about €7.75 million from over 35,000 investors – three of the most popular campaigns of equity crowdfunding history.