Solving Problems
From Equity Crowdfunding to Collective Equity
Darren Westlake - CEO of Crowdcube.
May 2020
May 2020
I founded Crowdcube in 2011, almost 10 years ago. Crowdcube was born out of my frustration as an entrepreneur in raising money for my startups but also seeing the same challenges that other entrepreneurs had in funding their companies. Equity Crowdfunding didn’t exist until Crowdcube came along, but I knew we were creating something that was definitely missing in the startup landscape and filling a need amongst entrepreneurs. Today, looking at companies that I see every day, I recognise that there is another need that needs fulfilling, another gap in the ecosystem.
Today, looking at companies that I see every day, I recognise that there is another need that needs fulfilling, another gap in the ecosystem.
We always advise investors investing in high-growth companies to do so as part of a diversified portfolio. However, company founders often suffer from a lack of diversification themselves. Of course, as founders we are 100% committed to our businesses, but often we are also the only ones who have all our wealth tied to that one business. Even well-funded, later stage businesses can suffer from unexpected events (Covid-19?!) and could even fail completely. If that were to happen a founder can lose their years of hard work and sacrifice, and all their (paper) wealth overnight.
Collective Equity Ownership (CEO) allows founders and shareholders of venture-backed tech companies to pool some of their shares together. A founder or shareholder ‘invests’ some of their own shares in to a fund and in return they receive shares in all of the other companies in the fund, plus also a smaller cash element too. This creates instant diversity as the fund is constructed to contain a wide range of types of company both in terms of industry but also size and stage. The founder investors in the fund then have the fun of taking an interest in all of the other companies that they now own shares in and can participate in the exits of each other’s companies. Of course, they are also incentivised to network with the other companies and contribute to their success wherever possible.
As founders we are 100% committed to our businesses, but often we are also the only ones who have all our wealth tied to that one business
Although allowing founders to diversify a small portion of their assets is a disruptive idea, it is proved to work. I remember the scepticism we faced when Crowdcube first entered the market. We were challenging the status quo and introducing a radical new way for businesses to raise finance, but now, almost 10 years on, what seemed radical then now seems almost commonplace.
As our meeting ended, Archimede asked me to join the board of Collective Equity Ownership and help him and his team with this venture, which I was excited to do. I knew that similar to Crowdcube, Archimede and his team were building a product that is needed in today’s tech ecosystem, but that had never been built before in the UK.
Collective Equity is an important new piece of the puzzle to make the startup/scaleup ecosystem stronger and more resilient.
Like Equity Crowdfunding, Collective Equity is an important new piece of the puzzle to make the startup/scaleup ecosystem stronger and more resilient. I’m super-proud to have made a real difference to this ecosystem with what we have achieved at Crowdcube, and I am excited to continue contributing by supporting what Archi and his team at CEO are doing to liberate entrepreneurs from their equity shackles.
Darren Westlake is a serial tech entrepreneur, having exited two companies prior to launching Crowdcube in 2011. Darren pioneered the crowdfunding industry in the UK, helping the FCA to adapt its regulations and democratising access for retail investors to back early and late stage companies. Crowdcube helped fund three UK unicorns, Brew Dog, Revolut and Monzo, on top of more than 1'000 other companies. Just in 2019, they helped companies secure over £125m in investments. Crowdcube is backed by some of the most prestigious VC funds in the UK, including Balderton and Draper Esprit.
Collective Equity Ownership (CEO) is the provider of an exchange fund in the UK. CEO allows shareholders of venture-backed tech companies in the UK, to pool some of their shares together with shareholders of other companies. In return shareholders can participate in liquidity events of each other's companies on top of their own.
Darren Westlake is a serial tech entrepreneur, having exited two companies prior to launching Crowdcube in 2011. Darren pioneered the crowdfunding industry in the UK, helping the FCA to adapt its regulations and democratising access for retail investors to back early and late stage companies. Crowdcube helped fund three UK unicorns, Brew Dog, Revolut and Monzo, on top of more than 1'000 other companies. Just in 2019, they helped companies secure over £125m in investments. Crowdcube is backed by some of the most prestigious VC funds in the UK, including Balderton and Draper Esprit.
Collective Equity Ownership (CEO) is the provider of an exchange fund in the UK. CEO allows shareholders of venture-backed tech companies in the UK, to pool some of their shares together with shareholders of other companies. In return shareholders can participate in liquidity events of each other's companies on top of their own.