Crowdcube review
6
(our review)
Crowdcube is one of Europe’s biggest equity crowdfunding platforms. On the platform, you can invest in shares of startups and growth companies, mostly from the United Kingdom and Europe. We rate the platform with a 6. The risk of loss is enormous. Most investments are very risky and shares cannot be traded in the interim.
Please note: investing in (shares of) startups involves risks. You may lose (part of) your investment.
Content:
What is Crowdcube?
Crowdcube is a well-known European platform in equity crowdfunding. This means that on this platform, you do not invest in loans, but directly in shares of startups and scale-up companies. These shares are not tradable. Because of that you will have to wait for an exit to get your money back after investing. An exit could be a takeover or IPO. Only a few companies on the platform reach that finish line, so there is a high chance that you will lose your investment.
The platform has been active since 2011 and has raised more than 1 billion pounds for hundreds of companies. Crowdcube focuses primarily on fast-growing companies in the United Kingdom and Europe.
Users often compare Crowdcube to Republic Europe or Invesdor.
There is a significant chance that you will not get your money back.
Usability
The website is easy to navigate and it allows you to filter campaigns by sector or country. It displays information about each company that is looking for funding, its plans and the terms and conditions. The companies themselves provide this information, which means that it is often biased. The scenario outlined in these plans are almost always overly optimistic. Crowdcube mainly checks for fraud and readability, not the content itself.
The displayed campaign information is usually too optimistic.
Registration and payments
The registration process on Crowdcube is simple. You create an account and confirm that you understand the risks. After that, you can start investing right away. You can choose how much money you want to invest, although you often need to buy whole shares. This means that your investment is usually a multiple of the price per share.
Payments can be made by bank transfer or credit card. Your investment will then appear in your account, where you can track its status.
Investing and ownership
In the dashboard, you can see per campaign how many shares you own, the value of those shares and you can also see the funds that the company wants to raise in total. Campaigns are usually open for a couple of weeks. Only after the full amount is funded, your investment becomes final.
Sometimes there are hundreds of investors and they are often represented through a nominee structure, like a foundation. Because of that, the company does not need to include you in the shareholder register. Crowdcube votes on behalf of the investors.
After investing
You can keep track of your investment’s progress after investing via the platform. Some companies post updates, but this varies greatly from company to company. Apart from those updates, Crowdcube provides few tools or notifications. There is no secondary market. After investing, there is little you can do as an investor other than wait for the exit, like an IPO or a company acquisition.
Invest via Mintos, Europe’s P2P leader with 11.62% average return, or EstateGuru for property-secured real estate loans across Europe. Investing involves risks. You can lose your investment.
Product offer
On Crowdcube, you can invest in shares of young companies. These are often startups, which or just getting started, or scale-ups that have already started generating revenue and want to scale up quickly. Many campaigns are in industries like technology, consumer goods, and renewable energy.
Sometimes there are also campaigns from brands that are already somewhat better known, or companies with a lot of media attention. However, the majority of campaigns are small, unknown companies with high risks. Campaigns are usually listed in British pounds, although European companies are increasingly listed in euros.
You can usually invest from around 100 euros per campaign. Sometimes companies give investors discounts on products, or offer certain benefits if you invest a minimum amount.
The majority of listed campaigns are from small, unknown companies with high risks.
Costs and returns
Crowdcube earns money from the companies that raise funding through the platform, it does not earn money from its investors. That means that it does not charge investors any subscription or transaction fees. However, sometimes it does charge currency conversion fees, for example when you invest in a campaign in British pounds from a bank account in euros.
In the event of a successful exit, like a company takeover or an IPO, Crowdcube usually charges a success fee. This only happens if you make a profit. The fee is usually around 5 percent of the profit, though it varies per campaign.
Returns
Returns on Crowdcube depend entirely on the success of the companies that are listed on the platform. Some investors have earned a lot in the past, from campaigns from well-known names like Revolut or BrewDog. But there are also hundreds of companies where investors suffered losses or lost their entire investment.
Crowdcube does not mention average returns for investors. An average also does not mean much, as a single outlier can have a significant impact. It does indicate that around 5 percent of companies have achieved a successful exit and that 23.5 percent have ceased operations (either through bankruptcy or dissolution).
This means that around 71 percent of companies that have raised funding are still active, which seems like a positive thing because many startups fail within their first three years. However, this does not tell the whole story. For example, one of the companies in which we invested as Investment Platforms did achieve a successful exit, but at a much lower valuation.
We have achieved fairly good results with the companies that are still active, but because there is no secondary market it is uncertain whether we will be able to cash in on these campaigns. It could take years until their exit, and a lot can happen in that time.
Not even a successful exit guarantees a profit. The share price may still be lower than your initial investment.
Reliability
Crowdcube was founded in 2011 and since then it has raised more than 1 billion pounds for hundreds of campaigns. It has a license from the Financial Conduct Authority (FCA) in the United Kingdom, which means that it is subject to financial supervision. Since 2023 it also has a European crowdfunding license (ECSP), with supervision from Spain.
The platform’s track record shows that only a small proportion of startups achieve a successful exit. It has a mixed reputation among investors. Many users appreciate its accessibility and wide range of offerings, but are dissatisfied with the communication and lack of updates after the investment.
Review score: 6
We rate Crowdcube with a 6: it is user-friendly and well regulated, but because of the high risks and lack of tradability, it is only suitable for experienced investors. You need to be knowledgeable about an industry or sector, to find the right campaigns among the wide range on offer.
Without this knowledge, there is a big chance that you will not get your investment back. Well-known campaigns from companies like Revolut or BrewDog are exceptions. Shares are not tradable and many companies never achieve an exit. Campaigns are often presented in an overly optimistic light and updates after completion are sometimes lacking.
