A CROWDFUNDING platform that launched a Scottish operation only last autumn has raised more than £1.5 million for businesses north of the Border, with the promise of much more to come.
Crowdcube’s bosses said they had been “overwhelmed” by the interest shown by businesses and investors since establishing a presence on the ground in Scotland with the opening of an office in Edinburgh in October.
The investment platform, which is one of the biggest players in the booming crowdfunding arena, also has offices in Exeter and London. Since 2011, more than 165,000 investors have registered with the outfit, helping to raise in excess of £80m of equity finance for 235 business pitches.
In Scotland, more than £1m has come from five successful pitches since the opening of the dedicated Scottish office. Two others raised funds prior to that launch.
In April, the biggest deal to date saw Flavourly, the craft beer and gourmet food service founded by Scots entrepreneur Ryan O’Rorke, raise £515,000 after the business turned down £75,000 of investment on BBC’s Dragons’ Den business programme.
Other Scots businesses to raise finance on Crowdcube so far include SuperJam, the award-winning producer of fruit jams founded by young entrepreneur Fraser Doherty, Growler Beers and Plan Bee, which specialises in the management of beehives.
Craig McKenna, who heads up Crowdcube’s Scottish office, said the figures showed that “the appetite for crowdfunding in Scotland is huge”.
He added: “We’ve been overwhelmed by the interest shown by both businesses and investors, and our success so far is only the tip of the iceberg. There is a great start-up ethos in Scotland at present, and, working closely with partners such as law firm Harper Macleod, we’ve been able to tap into this community and the results are clear to see.”
He added: “Every one of these successful pitches is a great company and I believe there are many more like them north of the Border.”
Luke Lang, co-founder of Crowdcube, said: “We launched in Scotland due to its strong entrepreneurial culture. It’s clear that our investor community has relished the opportunity to back Scottish businesses and with a growing number of businesses from the area looking to raise finance on the platform, we’re keeping up with demand.”
Crowdfunding, which allows expanding companies, both fledgling and established, to access capital from a wide base of armchair investors, has grown rapidly over the past five years.
New research from financial ratings specialist Company Watch – published yesterday – examined the financial strength of some businesses that have tapped into crowdfunding over the past three years.
Using proprietary evaluation methodology to rate a firm’s financial strength, it found that out of the 30 or so “high-profile” crowd-funded ventures reviewed, four had yet to file a full set of accounts with Companies House, several were not UK incorporated and others appeared to have stopped operating.
However, maverick Scots beer maker Brewdog, which has completed several successful fundraising rounds through its Equity for Punks scheme and is now looking to raise £25m via crowdfunding, achieved one of the highest ratings in the research.
Ewan Mitchell, head of analytics at Company Watch, said: “Just as in private equity or venture capital funded enterprises, crowd funding produces some clear winners and many others that don’t perform nearly as well as either the company or external investors had hoped.”