A new equity-crowdfunding platform is launching in the UK today, Growthdeck, which says it wants to improve the standard of investing in the burgeoning sector.
The company says it wants to "marry up the speed and low cost of crowdfunding platforms with the investment rigour that institutional investors would get and that private investors deserve.”
The platform will raise funds of more than £500,000, typically £1m. The group said it believed this was the minimum most start-ups required in order to grow competitively. The minimum individual investment will be £1,000.
The majority, but not all, of its investment opportunities will be eligible for EIS or SEIS tax relief.
Each fundraising will be overseen by a panel of industry specialists, which includes David Harding, the former chief executive of William Hill among business leaders from the renewable energy, manufacturing and leisure sectors.
Growthdeck is being launched by Radius Equity, a specialist in Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) investments, and Lexicon Marketing, a digital consultancy that for financial services firms.
Gary Robins, co-founder of Growthdeck, said:
In the rush to grow the crowdfunding sector, some of the fundamentals of investing in smaller companies have been forgotten. The existing UK crowdfunding model can come with a number of significant pitfalls for investors, we think it is time for a more professional approach.
For example, the level of due diligence undertaken on companies using crowdfunding to secure investment is often worryingly low – investors do not really know what they are buying.
One of the things Growthdeck will focus on is ensuring that start-ups businesses have a correct valuation during a fundraising, as an overvaluation will make it hard to agree future fundraisings and ruin relations with shareholders who bought in at a higher level. Robins added:
Screening out of inappropriate or overvalued companies through better due diligence is essential. There also needs to be more clarity about how investors are to exit their businesses and return cash to investors. This should be front-of-mind for an investor in any business.
James Codling, co-founder of fellow crowdfunding site VentureFounders, said he wanted to welcome Growthdeck to the market:
“Growthdeck’s entry to the market is a welcomed sign that the ‘alternative’ investment model of equity crowdfunding is actually seeing increasing consumer demand and becoming more mainstream."