How Investing with Equity Crowdfunding Can Give Great Results
The equity crowdfunding industry is seen as a good bet by investors. Despite high risks, some start-ups like Monzo and Revolut have yielded significant returns for early investors. In Italy, successful equity crowdfunding campaigns have led to notable growth, with companies like Winelivery and My Cooking Box experiencing substantial value increases.
Highlighting successes for investors (and also recognizing failures), especially in times of venture capital market contraction, is very important for the equity crowdfunding industry.
Young businesses, SMEs and Start-ups, generate great benefits for society, but the investors who support them, especially in the initial phase, take on a high risk: most start-ups fail.
Furthermore, in venture capital, which is also defined as ” atient capital,” it is necessary to know how to wait, and every now and then, some companies manage to hit the mark, recognizing multiples that cannot be achieved with other forms of investment to those who had invested.
The cases of Monzo and Revolut — how the companies raised money through equity crowdfunding
Earlier this month, an article on Tech.eu shared a meeting with two investors from Monzo, a successful digital bank that has raised money in several equity crowdfunding campaigns.
Eight years ago, an investor committed £1000, which today is worth around £28,000. The offering was listed on Crowdcube with a valuation of £29 million. Today, Monzo is worth billions. The investor then said he had also invested in other campaigns on Crowdcube totaling around £5000, which are now worth around £55,000.
Another investor who backed Monzo in its early stages, invested around £5,000 at different stages. Although his returns are not disclosed, it is reasonable to assume that they are similar to those of the early investor.
But there are other success stories. One of the most famous is that of Revolut, the UK-based digital bank, which in August 2017 raised £3.8 million on Seedrs.
Well, in the Seedrs secondary market, Revolut shows an indicative value of £27.9 billion, an increase of 5022.5% compared to the initial value.
Equity crowdfunding in Italy
In Italy, according to a study by Tech Alliance and BizPlace, almost 10% (9.8%) of the companies that raised through Equity Crowdfunding between 2014 and 2019 “made an exit”, that is, they went public on the stock exchange or has been the subject of M&A operations.
Furthermore, three years after the successful closure of the campaign, 13% showed growth in terms of revenues and margins.
Some of these cases concern, for example, Winelivery , which went from being a small startup to becoming a leader in the home delivery of drinks, whose value increased to €24.5 million, equal to 18 times the value of its equity crowdfunding campaign on Crowdfundme in 2017.
Or My Cooking Box , which markets boxes with all the ingredients to prepare Italian recipes, has recorded a revaluation equal to 19 times the postmoney value of the 2016 campaign, reaching the current value of €18.9 million.
__
(Featured image by AlphaTradeZone via Pexels)
Source: https://born2invest.com/articles/equity-crowdfunding-give-great-results/
