Tech firm snubs VCs in favour of crowdfunding
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London-based start-up Escape the City has turned down a £500,000 investment from what it calls a 'top' venture capital firm in favour of crowdfunding.
Escape the City, which helps people leave 'unfulfilling' corporate jobs, is favouring social funding rather than institutional investment to help it grow, and has topped £500,000 inside 15 days.
Speaking exclusively to GrowthBusiness, co-founder Rob Symington says that when the business embarked on its fundraising efforts it was not aware of the crowdfunding system. But he believes that funding the business with a large pool of micro-investors fits in with its brands and the way it wants to develop in the future.
Escape the City began as a newsletter when Symington and his co-founder Dom Jackman were still working as management consultants. After leaving their jobs two years ago, the two bootstrapped the business with £15,000 each in savings until they felt it was the right time to seek external investment.
The business works by helping professionals make career transitions and has a community of 65,000 people looking to leave corporate jobs.
Symington adds, 'Our first revenue stream [online job postings] was quite straightforward and allowed us to keep our heads above water.'
Having passed its initial £500,000 for 20 per cent equity target on crowdfunding site Crowdcube, the business has now upped its limit to £600,000 for 24 per cent. The interested VC firm was ready with a bid matching Escape the City’s first crowdfunding target but failed to convince Symington and Jackman that it was the way to go.
With £566,000 already pulled in, the business has attracted a largest bid of £20,000 (its top limit) and has seen an average of £1,400 committed.
Symington says that there have been 10 to 15 bids of above £10,000 and that the company is selling B shares - those with the same value as himself and fellow founder, but without a vote at the AGM.
In the future Symington would like to see the crowdfunding system become more regulated to encourage more people to invest using the various platforms that are available.