UK start-up investment website plans global expansion

LONDON Wed Jul 3, 2013 11:58am EDT

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LONDON (Reuters) - A British website which allows members of the public to buy stakes in small businesses is planning to expand worldwide, aiming to create a global platform linking investors to firms in need of funds.

As banks rein in lending due to tougher capital rules and greater regulatory scrutiny, crowdfunding, which originated in the United States as a way to raise money for creative projects, has expanded rapidly as an alternative source of finance.

"The ultimate aim is to build a network of crowdfunding sites in 25 to 30 countries ... so the whole thing becomes a global investment platform," said Darren Westlake, chief executive and co-founder of Crowdcube, which says it is the world's largest equity crowdfunding site.

"How does crowdfunding succeed? The best way is to build the biggest crowd, and how do you build the biggest crowd? You do it on a global basis," said Westlake.

Westlake said Crowdcube, through which businesses have raised 9.3 million pounds ($14.1 million) since it launched in 2010, was working on several joint ventures following strong demand from others looking to set up similar sites.

It has launched in Sweden and Crowdcube Brazil should be up and running in the next six weeks, followed by Crowdcube Middle East in the Autumn. It is also looking at partnerships including in the United States, Canada, Australia, Mexico and India.

While crowdfunding originated in the United States, equity crowdfunding has grown more quickly in Britain as U.S. regulators are still to agree rules for the sector.

Of $2.7 billion raised by crowdfunding globally in 2012, only $116 million came from equity crowdfunding, a survey by research and advisory firm Massolution showed.

Crowdcube, which is regulated by Britain's Financial Conduct Authority, has more than 38,000 registered investors and is aiming to grow this to half a million in the next two years. ($1 = 0.6592 British pounds)

(Editing by David Holmes)

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