Equity firm CrowdBnk offer a new approach to crowd funding and investment. Crowdbnk have raised funds totalling £6.5 million for a range of businesses in 2014. We spoke to Daniel Ross, Head of Business Development and Crowd Relations, about Crowdbnk and what sets it apart from other crowd funders.
TechSPARK: Who founded CrowdBnk and what inspired them to do so?
Daniel Ross: Ayan Mitra – he saw the explosion of Kickstarter in the US and recognised that there should be a similar, but regulated, platform model with more of a private equity/venture capital flavour.
As someone who had raised money himself for a startup, Ayan knew how hard it was to raise money through traditional means, and so a platform which could disrupt the existing ecosystem by using technology to create efficiency and scale – a platform which could access funds from a far wider crowd – would be of significant benefit to small businesses in the UK.
TS: What sets CrowdBnk apart from other crowd-funding schemes?
DR: CrowdBnk is fundamentally different from other Investment Opportunity platforms in three ways. We invest ourselves in every single business we support, so we are always fully aligned with our businesses and fellow investors. With our own investment as the purest validation of our due diligence process, we are very selective with the businesses we choose to work with. Every business that our investors look at has been through our Bootcamp – a 6-stage, rigorous validation process which ensures investor readiness and quality.
Bnk on it: Daniel Ross, Head of Business Development and Crowd Relations (left) and CrowdBnk founder Ayan Mitra (right)
There are 3 clear benefits for investors too. They gain EIS (equity investment scheme) relief. They have access to some of the very highest quality off-market deal flow and we save our clients time: we do 60-plus man hours of due diligence on every business we fund-raise for.
TS: How does CrowdBnk work?
DR: The business goes live on the CrowdBnk website for, typically, a 12-week period. Each business has its own campaign page where investors can come, log on to their account and access all the relevant information – business plan, accounts, video, question and answer term sheet.
“We invest ourselves in every single business we support, so we are always fully aligned with our businesses and fellow investors”
From there they can invest through the platform on the website and see their personal ticker (a visualisation which monitors the amount raised) move closer to the full target. When an investor invests, their money sits in an escrow account for the duration of the campaign. If the target is met, the funds are then transferred to the business. If not, the money is returned to investors.
TS: Has CrowdBnk invested in many companies in the South West?
DR: Not yet, but following our commitment to this year’s SPARKies awards [CrowdBnk were one of the sponsors of our awards this year], and the South West in general, we are in conversations with a number of businesses in the region about supporting them.
TS: What sectors do you think are ripe for crowd funding and investment?
TS: And which sectors do you feel that the moment has passed or it is over subscribed with too many similar companies looking for investment?
DR: While some sectors might be busier than others – mobile apps is a good example of this – it just means that focusing on the fundamentals of a strong management team and a good idea is even more important.
TS: How active a role does CrowdBnk take in companies in which it has invested?
DR: We don’t take a seat in the board but, as investors ourselves, we are monitoring progress and facilitating ongoing communications between the business and our fellow investors. We continually seek to support our businesses by connecting them with appropriate partners.
“Following our commitment to this year’s SPARKies, and the South West in general, we are in conversations with a number of businesses in the region about supporting them”
TS: If you could have invested in any company over the past five years which would it have been?
DR: Facebook seems like an obvious choice, but definitely Facebook.
TS: And what about the South West, who are the big players in the region which have received crowd-funded investment and been successful?