Crowdfunding platform Crowdcube has launched a new product called the Direct Community Offer (DCO), aimed at enabling later-stage startups to raise liquidity for early investors without going public.
Crowdcube argued that this would empower European startups using the service to offer early investors a return on their investment while simultaneously giving new investors a chance to buy a stake in a business they believe in.
The DCO comes on the back of a growing trend of businesses like Slack and Spotify have moving away from making initial public offerings to direct listings.
Crowdcube argued that the new feature connects three sets of stakeholders: entrepreneurs who wish to offer their communities a stake in their business, new investors via Crowdcube, and the current shareholders in the business who want to take up the opportunity to sell shares.
Speaking with Sifted, Darren Westlake (pictured), founder and CEO of Crowdcube, said, “We want to give businesses a way to reward early investors, particularly friends and family.”
Instead of waiting a decade on the return on their investment, early investors could provide “investors a return on their investment while simultaneously giving new investors a chance to buy a stake in a business they believe in,” he added.
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