How to make smarter crowdfunding investments? Crowdrating wants to solve that puzzle
Crowdfunding is booming. But for investors, choosing where to place your money can feel like a minefield.
A so-called agency is launching today, with the aim of helping investors make decisions hopes to change that, by giving all crowdfunding campaigns a rating of “gold”, “silver” or “bronze”.
Crowdfunding campaigns grew by a staggering 420 per cent last year, so there’s no question of the funding's allure.
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Established platforms often provide extensive business plans, financial projections and input from angels or venture capitalists to help inform investors, but there is increasing demand for external research.
“It’s an issue, investors don’t have enough information to help them make sensible investing decisions,” co-founder Alex Heath told City A.M.
The former chief executive of Interactive Investor teamed up with founder of AngelNews Modwenna Rees-Mogg last summer, when he realised he kept getting outbid in deals – by a crowdfunding campaign.
Together, the two have put together Crowdrating, which promises to give investors objective information on campaigns.
“We’re giving advice and guidance, and sending people in a certain direction,” explains Rees-Mogg.
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The pair are rating all live campaigns on crowdfunding platforms Crowdcube, Seedrs and Syndicate Room, providing a rating based on three dimensions: management, product and investment.
The founders say the response from both investors and entrepreneurs has been “encouraging” so far: “Investors are saying ‘thank goodness you’ve arrived’, and entrepreneurs, interestingly, are open and interested in what we’re saying – even when we point out a weakness,” said Rees-Mogg.
Crowdrating is the trading name of Wheatfromchaff, an appointed representative of Sturgeon Ventures, which is authorised and regulated by the FCA.