20 VC 020 Revolutionising Investing with Luke Lang, CoFounder of Crowdcube

In episode 20 of the 20 Minutes VC, host Harry Stebbings interviews Luke Lang, co-founder of CrowdCube, discussing the platform's revolutionary role in equity crowdfunding. Lang shares his journey from working in the tech industry to pioneering the first global equity crowdfunding platform with CrowdCube, which has raised over £67 million for 207 companies. He details the regulatory challenges they faced, the benefits of crowdfunding over traditional VC funding, and the strategic growth and market validation achieved through partnerships with entities like Balderton Capital and the UK government. Lang emphasizes the importance of community engagement for startups and CrowdCube's vision to be the go-to place for SME finance. He also highlights the potential for crowdfunding to act as effective marketing and the diverse types of companies that have found success through their platform, including JustPark, Righteous, and CrowdCube itself.

• Luke Lang is the cofounder of CrowdCube, the world's leading investment crowdfunding platform.
• CrowdCube has raised over £67 million for 207 companies.
• The platform has 150,000 registered investors.

"Now on today's show, I'm so excited to welcome Luke Lang, cofounder of CrowdCube, the world's leading investment crowdfunding platform, enabling anyone to invest alongside professional investors in startup, early stage and growth businesses."

This quote introduces Luke Lang and emphasizes the significance of CrowdCube in the crowdfunding industry, highlighting its role in enabling investments in various stages of business development.

• Luke Lang's entry into the technology industry began by working for his brother's ISP company.
• He experienced the transition from dial-up to broadband.
• The journey was marked by innovation and rapid growth.
• Luke's brother sold the company in 2007, which led Luke to meet his future CrowdCube cofounder, Darren.

"I first worked for my brother Mark, who started an ISP Internet service provider 20 years ago... And that was a tremendously exciting time and satisfying times to be involved in such an innovative, fast growth company."

The quote captures Luke Lang's early experiences in the tech industry and the excitement of being part of a rapidly evolving business space.

• Darren, the cofounder of CrowdCube, did not fit the corporate culture and was entrepreneurial.
• Luke and Darren started working on CrowdCube in their spare time.
• They left their corporate jobs in 2010 to launch CrowdCube.

"And it was really apparent to me right from the very beginning that Darren kind of wasn't the right. He didn't fit in with that kind of corporate culture. He was very much an entrepreneur."

This quote highlights Darren's entrepreneurial spirit, which was a driving force behind the creation of CrowdCube.

• Equity crowdfunding did not exist in 2007.
• CrowdCube was the first equity crowdfunding platform in the world when it launched in 2011.
• The emergence of Kickstarter and reward crowdfunding provided confidence for CrowdCube's model.
• CrowdCube aimed to offer shares and a real stake in companies, not just rewards.

"Crowdcube was the first equity crowdfunding platform, not just here in the UK or Europe, but anywhere in the world."

The quote emphasizes CrowdCube's pioneering role in introducing equity crowdfunding on a global scale.

• The FCA (Financial Conduct Authority) initially did not understand CrowdCube's model.
• CrowdCube had to fit into existing regulations that did not align with their philosophy.
• The FCA eventually reviewed the industry and created bespoke regulations for crowdfunding and peer-to-peer lending.

"The FCA didn't really understand what we were doing and what we were trying to achieve, and we were crowbaring ourselves into existing regulations that didn't quite fit with our ethos and our philosophy and where we wanted to be."

This quote describes the initial regulatory hurdles faced by CrowdCube and the process of adapting to a regulatory framework that was not designed for their innovative business model.

• Balderton Capital's recent investment in CrowdCube is significant.
• Apart from capital, Balderton brings development and growth support.

"And you've come an incredibly long way from there with the recent investment from Balderton and obviously on the crowdkeep platform itself."

The quote acknowledges the progress CrowdCube has made, partly due to the strategic investment and support from venture capital firms like Balderton Capital.

(Note: The transcript provided ends abruptly, and Speaker B's response regarding Balderton Capital's contributions to CrowdCube's development and growth is incomplete. As a result, the notes on this theme are limited to the information available in the transcript.)

• Boulderton has provided strategic direction, insight, expertise, and experience to Crowdcube.
• Tim Bunting, a senior partner at Boulderton, brings valuable market understanding due to his experience at Golden Stacks.
• Boulderton's experience in marketplaces and financial services, with investments in companies like Betfair, complements Crowdcube's business model.

"Yeah, I guess the obvious things are the strategic direction that they've helped us with. We've always had a very clear view of where we want to take Crowdcube. But Bolderton has certainly helped us to refine that and provided a lot of insight and expertise and experience."

This quote emphasizes the role of Boulderton in refining Crowdcube's strategic direction and contributing their expertise to Crowdcube's growth.

• Crowdfunding is seen as a different but competing finance model to traditional VC.
• Crowdcube has been directly competing with VCs for deals since its early days, as evidenced by winning over companies like Escape the City.
• There is a blurring of lines between various funding types, with deals on Crowdcube often including friends and family funding, seed capital, angel investing, and VC investment.
• Companies like Justpark, which previously received VC investment, are now engaging in crowdfunding, showcasing a shift in how companies view fundraising.

"I think they're different, but we do compete on deals. From the very 1st 18 months of our trading, we were winning deals."

This quote highlights the competitive nature of crowdfunding platforms like Crowdcube in the finance market, even in their early days.

• Flexibility and the ability to drive tougher terms are benefits of crowdfunding compared to VC funding.
• Speed of finance is a key advantage, with crowdfunding providing quicker access to money than traditional VC due diligence processes.
• Crowdfunding platforms like Crowdcube offer engagement with a community, building stronger relationships and a group of brand advocates.
• For companies in the sharing economy, such as Justpark and the Eden Project, crowdfunding aligns with their ethos of community engagement.
• Crowdfunding can also be a powerful asset for smaller businesses by creating a core group of passionate supporters.

"Well, obviously flexibility is good. You can drive the terms a little bit tougher than you can, maybe with a VC."

This quote points out the flexibility and negotiating leverage that companies may have when choosing crowdfunding over traditional VC funding.

• Crowdfunding campaigns can lead to significant press coverage and exposure.
• Justpark received media attention from major outlets, which helped increase their visibility.
• The community of nearly 150,000 investors on Crowdcube can become potential customers, leading to a boost in sales post-campaign.

"Yeah, I mean, just park as an example. I mean, they've had tremendous amount of press coverage off the back of what they've done."

This quote illustrates how crowdfunding can serve as an effective marketing tool, bringing media attention and new customers to the business.

• A great idea with a clearly identified market opportunity is essential for a successful crowdfunding campaign.
• Speaker A inquires whether having a product beyond Crowdcube is necessary, but the transcript cuts off before Speaker B can respond.

"Yeah, there are. And I don't think this is going to be a surprise to anyone, but I think you need to have a great idea to begin with, with a clearly identified market opportunity."

This quote suggests that a solid business idea targeting a specific market is a key component of successful crowdfunding campaigns.

• Startups can secure funding before having a product in the market.
• Traction and momentum, such as having a minimum viable product (MVP), can aid investment decisions.
• Pure business plans have successfully attracted investment if they are well-crafted.
• Entrepreneurs' preparation, tenacity, and determination are crucial traits for securing investment.

A company raised 400,000 pounds last year and it was purely a business plan.

This quote demonstrates that a well-constructed business plan can be sufficient to attract significant investment, even in the absence of an actual product.

Any progress and traction that you can display will certainly help.

This quote emphasizes the importance of showing progress, such as an MVP, to improve the chances of securing investment.

And those three key traits we see time and time again from our investors.

The quote identifies preparation, tenacity, and determination as recurring characteristics of successful entrepreneurs according to investors.

• Crowdcube welcomes competition as it validates and builds the market.
• Competition has increased with UK and overseas platforms entering the market.
• Crowdcube is experiencing rapid growth and is focused on maintaining its lead.
• Recruiting top talent is a strategy to strengthen Crowdcube's position.

Well, we take it very, very seriously.

This quote conveys the importance Crowdcube places on addressing competition in the equity crowdfunding space.

We've helped fund over 200 businesses now and 205 of those were in 2014.

This quote showcases Crowdcube's significant growth and market impact within a specific timeframe.

We're creating a world class team.

The quote indicates Crowdcube's strategy of building a strong team by hiring experienced professionals from reputable companies.

• Crowdcube is exploring ways to attract institutional money without compromising its core values.
• Balancing the interests of the crowd with institutional investors is a delicate matter.
• Government investments into Crowdcube-funded businesses are seen as validation.

We're always looking at those opportunities.

This quote signifies Crowdcube's openness to diversifying their sources of capital while maintaining their mission.

We want to remain true to those values.

The quote reflects Crowdcube's commitment to its founding principles of empowering ordinary investors.

We recently won some investments from the government, where the uk government will be investing 5 million pounds into businesses through Crowdcube for tech startups in London.

This quote highlights a significant achievement for Crowdcube, securing government funding that supports their platform and the startups they aid.

• Crowdcube has evolved from a small startup to a platform with government endorsement.
• The UK government's investment is seen as a strong signal of confidence.
• Crowdcube is funding a substantial number of businesses monthly.

From just four years ago, when it was just Darren and I working on this in a pokey office in the city centre, we've gone from the SCA introducing bespoke regulation for us.

This quote reflects on Crowdcube's journey from humble beginnings to influencing regulatory changes.

We're funding ten to 15 businesses per month, which is real.

The quote provides evidence of Crowdcube's current scale and its impact on the startup ecosystem.

I think that's a real endorsement, and I think it sends a signal of confidence and trust to not just investors, but also to entrepreneurs as well.

This quote highlights the significance of government funding as a form of validation for Crowdcube's business model and its users.

• Crowdcube aims to be the premier destination for SME (Small and Medium-sized Enterprises) finance in the UK, specifically in the growth finance sector.
• The focus is on providing investment opportunities that are both interesting and inspiring to investors.
• The goal is to become an integral part of the UK's corporate finance landscape and a hub for ambitious British businesses seeking growth and investors wanting to support them.

"So the go to place for SME finance in the UK, I guess I should caveat. That is growth finance." "We want the investment opportunities to be interesting and inspiring for investors." "So I think there's a real opportunity for us to become part of the fabric of corporate finance in the UK and a real destination for ambitious british businesses that want to grow and investors that want to back british businesses."

These quotes outline Crowdcube's strategic focus on growth finance and its aspiration to be a key player in the UK's financial ecosystem, especially for SMEs and investors interested in supporting them.

• Awareness has been the most significant challenge for Crowdcube since its inception.
• The platform was launched on a shoestring budget and initially bootstrapped, with financial investments in marketing coming only a year later.
• Overcoming the awareness challenge involved leveraging good quality public relations to tell Crowdcube's story and attract media attention, especially during the economic downturn when traditional banks were reluctant to lend.

"Well, I guess awareness was always our biggest challenge." "We were bootstrapping right from day one, and it wasn't until twelve months later that we actually raised some finance to invest in marketing." "The way we overcame it, certainly in the early days, was through good quality pr."

These quotes highlight the initial struggle with raising awareness for Crowdcube and how strategic PR played a crucial role in overcoming this hurdle by capitalizing on the media's interest in innovative finance solutions during tough economic times.

• Just Park is an innovative app and website that allows users to rent out their driveway spaces.
• The company has 700,000 registered users in the UK and is backed by Index Ventures and BMW.
• BMW has integrated Just Park's app into their Mini cars, showcasing the app's success and potential.

"It's an imative app that allows and website that allows people to rent out their driving spaces to people that are looking for places to park."

This quote describes Just Park's business model and its integration into the automotive industry, indicating its innovative approach to parking solutions and its traction with users and investors.

• Righteous is a salad dressing company that has successfully raised funds through Crowdcube twice.
• The company has expanded from a small producer to a global retailer, selling products in thousands of UK supermarkets and in North America.
• Righteous's success story is particularly inspiring as it was financed almost exclusively by the crowd and achieved significant growth with a small team.

"They've gone from a small producer of salad dressings to a global retailer."

This quote summarizes the growth and success of Righteous, a company that has utilized Crowdcube's platform to scale from a local producer to an international brand.

• Crowdcube has also raised money on its own platform on three occasions.
• The funds raised have enabled Crowdcube to build a world-class team, invest in branding and marketing, and support more businesses.
• The most recent funding round was completed in just 16 minutes, highlighting the platform's effectiveness and the confidence of its investors.

"And then most recently, where we did a raise with Boulderton Capital, we raised 1.2 million, which topped up the 3.8 from Boulderton. And we did that in just 16 minutes."

This quote demonstrates Crowdcube's own success in fundraising on its platform and the rapid support from its investment community, reflecting a strong endorsement of the platform's capabilities and future potential.