A couple of days ago the prospectus opened for punters like you and me to invest £8.94 per share in UK accounting software SaaS start-up Clear Books. What seems to be a little atypical about this ‘crowdfunding’ attempt is that it is being run by the company itself rather than through the 'usual suspect' crowdfunding websites.
Clear Books co-founder and CEO Tim Fouracre aims to raise £840k in return for 4.5% of the equity, valuing the company at just shy of £19m. Some might view this valuation as a little racy (I couldn’t possibly comment) given Clear Books’ current revenues of £473k and net losses of £65k. According to Clear Books’ website, they have so far raised £121k, of which £86k has come from existing shareholders.
Setting aside whether or not Clear Books is a good investment, or indeed whether or not it is the bees knees in accounting software (there are so many others out there like it), what is worthy of praise is the level of disclosure in the company’s prospectus. At first blush there seems to be plenty in there for informed investors to take a reasoned view.
Uninformed investors may say ‘what the heck it’s only £8.94’ and think how great it is to support a ‘little British battler’ (in the generic sense), and I can understand that sentiment. But I am sceptical about whether having tens, hundreds or even thousands of little investors backing them, rather than one or two substantial investors (with a much greater slice of pie of course) who could also bring to the table some decent business experience, will truly further the founders’ cause.