Luke Lang, co-founder of the world's leading investment crowdfunding site, talks trends in alternative finance and how to maximise your chances on the crowdfunding platform.

Luke Lang co-founded Crowdcube in 2011 with Darren Westlake. Since then, Crowdcube has amassed a rapidly growing crowd of nearly 190,000 people who have invested more than £93 million, funding 270 businesses as a result. CrowdCube were part of a panel at an InformedFunding event.

Tell us about yourself and why you decided to set up Crowdcube. Where are you based? Have you ever sought outside funding yourself?

Crowdcube is a revolutionary platform that makes investing accessible and affordable while enabling businesses to take back control of raising the finance they need to start or expand their business, with the added benefit of being backed by the crowd.

The idea for Crowdcube was sparked by the frustration of watching Dragons’ Den and seeing great business ideas fall by the wayside if the Dragons didn’t buy into the pitch. So Darren and I launched Crowdcube, which enables businesses to pitch their idea to a wider audience, with everyone in the crowd having the potential to be an ‘armchair Dragon’ and invest anything from £10 to over £100,000.

Our head office is in Exeter but we also have an office in London, as well as a number of overseas operations including Poland, Spain, Brazil and Sweden, with plans in progress for further offices across the globe.

We have raised our own finance through Crowdcube in three separate raises. Our most recent raise saw us reach our investment target of £1.2m in just 16 minutes, alongside investment from one of Europe’s largest VCs, which also invested £3.8m on the same investment terms as the crowd. 


What’s the typical profile of a successful business seeking finance from you?

There isn’t a typical profile for successful businesses on Crowdcube, which is one of the reasons why we have amassed 100,000-plus investors, all of whom are looking for a range of interesting investment opportunities.

The successful businesses on Crowdcube are those that have been able to inspire investment from the crowd with a clear, interesting and financially attractive business idea. 

We’ve helped a range of businesses raise finance, from startups looking to raise tens of thousands to get their business off the ground, to more established brands such as the Eden Project and River Cottage, who have raised over £1 million on Crowdcube in a matter of hours to fund their business’s growth.

The successful businesses on Crowdcube are those that have been able to inspire investment from the crowd with a clear, interesting and financially attractive business idea. 

What information should a business have prepared before applying for a loan on your platform?

Businesses on Crowdcube are pitching for investment in return for a stake in the business, so it’s an entirely different approach to raising finance through angel or VC investment, or even a traditional bank loan. It puts the business back in control of raising the funds it needs to establish or grow.

For a business to be approved to pitch on Crowdcube they will need a business plan, financial forecasts for the next three years and a compelling video pitch that clearly explains the investment proposition. Investors also want to be inspired and excited, so it’s important that the pitch doesn’t lack passion or enthusiasm for the business.

Essentially there are three key elements to get across in a pitch for investment – the idea, how it could impact the market, and how investors could see a return on their investment.

What’s your advice for a small business seeking funding?

When pitching for investment it’s important to be clear about what makes the business unique and what the strategy for growth is. From our experience we know that people are more likely to invest in a business if it’s something they are already passionate about or if it’s just too interesting or compelling to ignore, so if your business ticks one or both of those boxes you’re off to a good start. 

We’re seeing more and more businesses turn to crowdfunding to raise finance, and the types of businesses looking to the crowd for investment are becoming increasingly diverse.

When seeking finance, businesses need to be mindful that no investor wants to take on more risk than they have to, so the more tangible developments a business can demonstrate, such as sales or contract wins, the better. Last, but by no means least, investors will want to know how they could see a return on their investment so it’s important to outline how and when that will happen.

What measures could the government introduce to make life easier for new and growing companies? How can the government make crowdfunding more attractive to investors? 

The Government already offer beneficial tax relief schemes, such as the Enterprise Investment Scheme (EIS) and The Seed Enterprise Investment Scheme (SEIS), for small business investors, making crowdfunding an attractive option for investors. However, recent research from YouGov has found that only 13 per cent of people that invest in stocks and shares are aware of such schemes. With more people investing in small businesses through platforms like Crowdcube, more needs to be done to make investors aware of these tax-relief schemes to help boost new and growing companies. 

What do you see as the most important trends in crowdfunding?

We’re seeing more and more businesses turn to crowdfunding to raise finance, and the types of businesses looking to the crowd for investment are becoming increasingly diverse. Just looking at some of the businesses that have recently raised finance on Crowdcube, such as Sir Stelios’s latest venture, easyProperty, it’s clear that crowdfunding is quickly becoming a more popular option for established brands who are looking to raise finance. This is all great news for investors, who now have access to a growing array of businesses looking for investment on Crowdcube.

Crowdfunding is also becoming an increasingly popular choice for investors. Over 50 per cent of our members joined the site this year, showing an encouraging upward trend in the crowdfunding sector.

Find out more about Crowdcube on their website and follow them on Twitter.

Informed Funding is an online information resource designed to help growing businesses identify the range of options they have to raise finance.