Do you do business in your region? Sign up to our daily bulletin to keep up-to-date.
Customers of Cheshire property crowdfunders invest £156k in business
Posted by Bdaily Business News on 13 May 2014
Customers of ‘The House Crowd’ have sent a clear sign of their confidence in the company by ‘crowd funding’ its own expansion, investing more than £156k and valuing the company at £3 million.
The House Crowd started trading two years ago and offers people the opportunity to invest as little as £1000 in the property market. Since it started trading it has bought and refurbished 55 properties in and around the Manchester area, totalling more than £3.7 million raised via crowd funding.
Wishing to develop the company further, managing director Frazer Fearnhead, decided to turn to existing customers and ask them if they would like to fund the expansion. He was overwhelmed by the response.
Frazer commented; “In our short two-year history, we have successfully sold the concept of crowd funding to our customers so much so, they have decided to invest their money in our business.
In the space of two days, our customers had pledged a figure around £465,000, £309,000 more than we had asked for.
The plan was to raise £156k to fund a marketing campaign and business expansion. 52 shares were offered at £3,000 each. In return the investors received 4.9% equity in the company valuing it at £3 million.
Frazer said: “In just three hours the offer was fully subscribed. However, this was partly down to a number of large investors applying for multiple shares. To give as many of our customers as possible a fair chance to invest, we kept the share offer open.
"By 12 noon on the day of offer we had met our target of 52 people but had amassed a colossal pledge of £435k.“
The House Crowd continued to receive a further £30,000 worth of pledges after the offer had closed. One share each was issued to the first 52 people to apply, giving the company the £156,000 it needs to realise its expansion plans.
Frazer added: “We successfully crowd funded the expansion of our unique crowd funding company. This clearly shows the power and popularity of crowd funding. It also demonstrates the faith and confidence our own customers have in our company. It is really very gratifying to know that our own clients - the ones who know us best - are so pleased with what we do, they want to be a part of it.“
The money raised will be used to employ additional key staff members and to fund a significant marketing campaign, enabling The House Crowd to continue building on the success of its first two years in business.