Is crowdfunding the new power tool for Angel investors in disguise? I cannot answer that question but research firm Beauhurst has published its report on the UK equity market and according to their authors the biggest story of 2014 was the rise of crowdfunding platforms.
First of all it should be noted the UK equity market has experienced a bit of a boom. A combination of innovative fintech firms, supportive government officials and conducive tax incentives have generated some impressive results. According to Beauhurst, “2014 was an outstanding year for growing companies” and it is time to acknowledge that equity investing has gone mainstream. Their numbers indicate an aggregate raise of £2.3 billion for 1,006 deals. This spans the spectrum of old-school analog opportunities alongside the internet juiced digital future. A review of 2011 shows an combined equity amount raised at less than half this amount.
Returning to the investment crowdfunding universe, Beauhurst reveals that more than 30% of investments in “fledgling” (seed stage) companies were generated via crowdfunding sites – apparently at the expense of Angel networks. The authors see this number increasing for 2015 touching or topping 50%. Correspondingly the researchers see Venture stage deals nearing 20% on crowdfunding sites.
The report also ranks investment crowdfunding platforms. Pretty consistently Crowdcube is at the top with Seedrs at number 2. SyndicateRoom and Seedcamp are also in the mix.
Part of the power and potential of investment crowdfunding is the associated transparency of the process and the efficacy of online investing. Communication between issuer and investor is facilitated by funding platforms. This is in contrast to the traditional approach where information remains at a premium and thus hinders those without access.
So will Angel networks go the way the dinosaur? I doubt it. They will adapt and embrace the realities of this new investing ecosystem.