Posted on 29/05/2018 15:27:27   by  

BrewDog brings hope to Crowdfunding Investors – but is it well founded

As a CrowdCube and Seedrs investor I was delighted to read on Off3r.com today about the Investment raised by BrewDog, valuing their business at nearly £1bn and generating £100m for the founders – just 10 years after starting up with just £20,000 of cash.

The good news for Crowd Investors who were in their first round in 2010, is that they will enjoy a 2008% return in just 7 years. The bad news however, is that they are only allowed to sell 15% of their stake. Still, it’s an amazing return and it’s the chance of returns like this that probably attracted them to crowdfunding in the first place.

This is also a big story because exits in business crowdfunding are still very rare, I’m not certain, but I believe there’s been less than 10 in the UK since the industry started. And they need to be balanced by the mostly unreported business failures some of which I have invested in myself.

Don’t get me wrong, I am a great supporter of equity crowdfunding for businesses and if I had spare capital I would do more of it. But I worry that most investors are not aware of the likelihood that they will ever be able to exit.

  • That’s why we started CrowdLords. We wanted to be able to offer the same excitement and feel good factor of helping businesses grow (and our Developers and LandLords are really small businesses themselves) but with a few important differences:
  • With Property Crowdfunding you know the tangible value of the asset when you make your investment, with business crowdfunding you don’t
  • With Property Crowdfunding there is a clearly stated exit and a fully costed business plan to achieve it, with business crowdfunding there isn’t
  • With Property Crowdfunding, whilst your capital is also at risk, the likelihood of you losing it all is many, many times less than with business crowdfunding
  • With Property Crowdfunding you can expect to enjoy between 5% and 25% total returns p.a. (depending on your risk profile) over the term of your investment. With business crowdfunding you’re left hoping that within your portfolio you’ve a BrewDog or two quietly turning into a Unicorn