Organic coffee company Cru Kafe turns to Seedrs to raise £300,000 in crowdfunding campaign to “stabilise its working capital”
Ethical coffee brand Cru Kafe is looking to raise £300,000 in an equity fundraiser on crowdfunding site Seedrs.
In exchange for 5.76 per cent of the company's stock, the Cru Kafe, which makes organic, Fairtrade coffee capsules for espresso machines, is looking for cash to help grow its business.
Co-founder and chief executive Colin Pyle told City PM the company needs to "stabilise its working capital", which Pyle said was the business' "biggest issue at the moment", and needed between £75,000 -£100,000, as the company looked to reach new customers and sales channels.
Cru Kafe is also looking to hire more staff, and invest in marketing, especially print and TV advertising.
The company says its sales are growing at around 15 per cent a month, up to £60,000 in October, and Pyle added that company "has lots more room to grow."
Cru Kafe has given itself a £4.9m valuation, which Pyle told City PM is based on annualised revenues of £60,000, and puts a 6.5 x multiple on the company.
While Seedrs checks the history of all companies on its platform, and carries out due-diligence on the claims they make, it doesn't vet valuation figures.
Research from Beauhurst earlier this year revealed that nearly two-third of companies seeking to crowdfund up to £500,000 offered less than 20 per cent equity to platform investors but offered private equity firms around a 44 per cent stake for a similar investment, suggesting private investors are vulnerable to excessive valuations.
Pyle founded Cru Kafe two years' ago on Kickstarter with John Quilter and Bodil Blain, and since then has raised £800,000. This is its first crowd-funding campaign, and Pyle said the group was also looking at other potential sources of investment.
The brand is stocked in upmarket outlets including Harrods, Harvey Nichols, Wholefoods, Ocado and Partridges in Sloane Square, and has relationships with Soho House and Jamie Oliver's restaurant groups.