When companies seek crowdfunding and offer 10% equity with a target of £100,000 for example, what happens when they receive 200% funding within the pitch period? Is equity only offered to the 1st 100%, does the company release more equity, is the original equity watered down or what?
Thanks,
Jon
I imagine there is more than one option available for a company.
Someone might know exactly what Monzo did at its last crowd funding if you are asking about that
Have you tried looking at Crowdfunding websites help pages?
Here’s Crowdcubes: https://help.crowdcube.com/hc/en-us/articles/206709910-What-is-overfunding-
Thanks!
They didn’t allow over-funding. I imagine with the much larger investors now, equity is quite tight and so they need to be precise with how much they are offering.
They carved out £100 million I think it was £80 million came from VCs and £20 million from crowdfunders - this needs checking though.
I have always wondered if the over subscribed ones are actually over subscribed or whether they just set it lower so it looks over subscribed
Not highlighting any particular company but have a scroll of crowd cubes website
Well from a technical standpoint they are overfunded whether they set the bar lower or not (they’d still have to offer more equity) - I wouldn’t put much thought into whether it is overfunded or not though as that shouldn’t affect your investment decision.
When companies overfund they simply release more equity at the same price per share.