LONDON Jan 27 A British website which allows
members of the public to buy stakes in small unlisted businesses
has launched a fund for people who would rather leave the
decision over where to put their money to a professional.
As banks rein in lending due to tougher capital rules and
greater regulatory scrutiny, crowdfunding, which originated as a
way to raise money for creative projects, has expanded rapidly
as an alternative source of finance.
Crowdcube, which has more than 57,000 investors in the UK,
said the managed fund was the first of its kind and would enable
people who want to invest but who do not have the time or
resources to review company pitches and carry out their own due
The growth of crowdfunding has prompted some concern that
not all individuals are aware of the risks involved in investing
in start-up or early stage businesses, which Office for National
Statistics research shows at least half fail.
Last year Britain's financial watchdog proposed tighter
controls for crowdfunding websites, including limits on the
proportion of their portfolio people should hold in unlisted
shares or debt securities, aimed at protecting inexperienced
The Crowdcube Venture Fund, which has a minimum individual
subscription of 2,500 pounds ($4,100), will be managed by
Strathtay Ventures, a subsidiary of Braveheart Investment Group
"There are a large number of investors who like the
crowdfunding concept but who, for one reason or another, find
the DIY route problematic," said Geoffrey Thomson, Chief
Executive of Braveheart.
Crowdfunding websites helped companies and individuals
worldwide raise $2.7 billion from members of the public in 2012,
an 81 percent increase on 2011.