Funding platform Crowdcube’s losses spiral as costs surge
Crowdfunding platform Crowdcube haemorrhaged cash last year after its costs surged amid the “largest economic downturn in decades,” the company’s latest accounts showed.
The Exeter-based firm, which allows small businesses to raise cash by selling shares to investors, sank to a £9m loss last year, up from a loss of £0.9m in the previous period.
While revenue rose from £11.8m to £14.5m, the firm’s cost of sales nearly doubled to £6.2m pushing it deeper into a loss.
“We spent 2023 adjusting our cost base to ensure we enter 2024 in a strong financial position,” a Crowdcube spokeswoman told the Times. “We are well capitalised and focused on becoming Europe’s largest private market investment platform for retail and mass affluent investors.”
The firm altered its accounting period to end in December last year rather than September, meaning the accounts cover a 15-month period. In its accounts, bosses said the period covered the largest “economic downturn in decades,” the Times reported.
Investors can take advantage of tax breaks such as the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) by investing in small businesses via Crowdcube’s fundraising platform. Revolut and Monzo are among the companies that have used Crowdcube to raise cash in the past.
However, the firm has come under fire after some companies using the platform have been accused of misleading investors. City PM revealed last year that Crowdcube was facing a deluge of complaints to the financial complaints watchdog after a fast food firm allegedly raised cash from investors using an old business plan.
In their complaints to the Financial Ombudsman Service, investors claimed Crowdcube failed to verify the firm’s plans. Crowdcube has said previously it has “stringent due diligence processes in place,” and is “continually enhancing the processes” it has to beef up fundraising claims.