ETF-focused Fintech InvestEngine has closed another successful crowdfunding round on Crowdcube, with the commission-free investment platform picking up almost £2.0 million in new funds.
InvestEngine valued at nearly £30m
InvestEngine had targeted £1.25 million from its latest crowdfunding round, which was managed by Crowdcube, however, it comfortably surpassed that figure and raised £1.94 million.
This was the firm’s second foray into crowdfunding having raised £1.30 million in 2022, at a then pre-money valuation of £15.60 million.
The latest fundraising came on a pre-money valuation of £27.60 million, the new issue was oversubscribed within 24 hours, with 1127 investors taking up the opportunity to invest.
InvestEngine’s growth
InvestEngine wants to become the ETF distribution platform of choice for the world’s leading ETF providers. The business intends to match investors with ETFs through various saving and investing products, including workplace pensions, SIPPs, or Self-Invested Personal Pensions and ISAs.
However, InvestEngine is very much a startup with assets under administration of just £170.0 million, though it has been growing its active customer base, which now totals 25,000, some 4 times larger than it was at the time of the firm’s first crowdfunding round.
Can InvestEngine survive on crowdfunding and management fees?
The firm offers commission-free self-directed investment or a managed service that charges just 0.25% power annum, on top of market spreads and ETF admin fees.
InvestEngine has calculated that these will average out at around 0.23% of the portfolio per annum, which means that investors can expect to pay somewhere in the region of 0.48% for the managed portfolio service.
That level of charges means that InvestEngine is far cheaper for a customer with £20,000 in their portfolio than rivals such as Hargreaves Lansdown, Nutmeg, Wealthify and Moneyfarm.
InvestEngine is aiming high but its ambitions are clearly striking a chord with both crowdfunding investors and Good Money Guide users, whose votes helped the company to win the Best ETF Investing Platform category at our recent awards ceremony.
The fact that the firm managed to exceed its crowdfunding target within 24 hours is a positive sign.
However, whether a shy £2.0 million will be sufficient, to allow the firm to grow its business, quickly enough, to attract the attention of venture capitalists and other larger investors, remains to be seen.
Achieving critical mass quickly is key for financial services businesses, if they are to stand out from the crowd and go on to bigger and better things.
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