Equity Crowdfunding operates around-the-clock, 24×7, in Britain. In three years the sale of Crowdfunding shares has increased from $3-million to $52-million. The British Equity Crowdfunding format merits consideration in Canada and USA.
UK Equity-based Crowdfunding 2011-2013
2011 – £1.7-million (Cdn$3-million)
2012 – £3.9-million (Cdn$7-million)
2013 – £28-million (Cdn$52-million)
Source: The Rise of Future Finance – The UK Alternate Finance Benchmarking Report, December 2013 page 8.
There are several Equity Crowdfunding companies in Britain some of which are registered with the Financial Conduct Authority, “FCA”. For a glimpse of how Equity Crowdfunding works in Britain view Seedrs.com, Crowdcube.com or CrowdBnk.com.
Crowdcube has assisted over 100 companies obtain Equity Crowdfunding in the last three years and only two of these companies have failed; an acceptable rate that is likely similar to the failure rate of small public offerings in Canada.
The recent Shareight Equity Crowdfunding describes a two day success story and shows that it is easier to sell shares in 12 European Union countries than in 13 provinces and territories in Canada.
: On March 11, 2014 over a 17-hour period, Shareight raised £350,000 from 95 investors. This exceeded the Seedrs records for speed and amount raised (excluding Seedrs own fundraising campaign last year).
The 95 investors came from eight different countries, with over £100,000 coming from outside the UK. The average investment £3,684, and the median was £300. The largest investment was £79,000, and the smallest was £10.
Roughly half the investors were existing Seedrs members, while the other half joined during or shortly before the campaign. In total, Shareight, a mobile shopping app, raised £605,000 from 299 investors in 12 countries.
: there is an easy resale process with minimal restrictions on Crowdfunding shares in Britain. The British resale process is far more shareholder friendly than the indefinite hold proposal in the Ontario 54-106 Crowdfunding Request for Comments of March 20, 2014.
Some British investors who bought Equity Crowdfunding shares with tax and/or grant incentive would lose these tax and/or grant incentive if they sold these share within three years of their purchase. Favourable tax incentives are responsible in part for the success of equity crowdfunding in the UK during the last three years.
Presently there is no secondary market for trading shares of private crowdfunded companies in England. However both Seedrs and Crowdcube have advertised order-matching websites for arranging secondary market trades.