One of the exciting features of new industries such as crowdfunding is that you get almost constant innovation. Two fund-raisings conducted by small businesses over the past month or so represent a case in point: in both cases, the companies chose to raise money via a crowdfunding platform as part of a stock market flotation.
Until now, equity-based crowdfunding, where the business raises money by selling shares to investors, has been seen as an alternative to listing shares for sale on a stock market. But the two routes are not incompatible, as first Mill Group and then Domaine Chanzy have been proving.
The two companies could not be more different. Mill Group is a residential property business, focused on the rentals market. Domaine Chanzy is a French wine producer based in the Burgundy region of the country.
What these two businesses share in common, however, is an ambition to list their stock on London’s Alternative Investment Market, the junior market at the London Stock Exchange. And as they pursue their separate listings, both have chosen to use crowdfunding platforms to appeal to as wide an audience of investors as possible.
In the case of Mill Group, the business reached out via SyndicateRoom, while Domaine Chanzy’s platform of choice was Seedrs. But the principle was the same either way – the shares investors get via the platforms will be listed on Aim once the companies’ initial public offerings successfully complete.
It’s an interesting model that’s likely to appeal to investors – one of the worries for anyone participating in a equity-based fund-raising is whether they’ll be able to sell their stock if they need to – those with Aim-listed shares will have no such worries.
As for the businesses themselves, raising the money this way gives them a route to a wider investor base than they might have gained from a straightforward Aim listing.
This appears to be a win-win situation in other words. This isn’t an option for all businesses raising money on an equity-based crowdfunding platform – Aim has criteria about which types of company it will accept and early-stage businesses may not be appropriate – but it’s an encouraging development. The more options businesses have when raising money, the better.
David Prosser, SME & Business Editor
You can link to the article on Nurture Money here.