Commercial Interview: Matt Cooper, Crowdcube
As part of our Insight Interview Series, The Up Group spoke with Matt Cooper (Chief Commercial Officer at Crowdcube) to discuss the Commercial landscape and future developments across Commerce as a whole.
UP: Crowdcube has experienced huge growth in the last few years, what is it about your business model that drives this?
MC: There are a number of facets to our business model which have allowed us to experience the level of success we have. On a broad level, the simplicity of our customer proposition - a marketplace offering individuals the chance to invest in companies of all shapes and sizes from different parts of the world - differentiates us from other businesses in the complex world of financial services.
The business, being a marketplace, is split into two. On our demand side, the customer or investor is generally from the UK and/or Europe with a healthy household income, living in London or the South East. They tend to work in financial or professional services or in technology. This is traditionally a hard, and expensive demographic for most brands to market to and is one of the reasons why crowdfunding has proven so popular with consumer brands. The £6.1m we just raised for Mr & Mrs Smith is a good example of this in action.
Making sure that our supply side is of the highest quality and onboarded correctly is intimately linked with our investor acquisition as the companies we raise investment for bring their customer base to our marketplace. As a result, most of the Commercial function at Crowdcube is focused on the supply side (companies). The approach we take with these companies is generally dictated by their size and stage of growth. The larger they are, the higher touch we are.
Our Partner & Affiliate function helps deliver around 30% of our (supply side) business. This allows us to educate, advise and support a large network of advisors and partners across the UK and Europe from our office in London, without needing a huge head-count internally to scale.
UP: With crowdfunding being a relatively new way of raising investment, are there issues of trust?
MC: Amongst the incumbent investment community - traditional VC and PE as well as their affiliated services such as accountancy and legal - there were definitely challenges around acceptance and trust but these are challenges we have risen to.
If you look at the data, we are, by the number of transactions, the largest equity investor in the UK. We facilitated more £1m+ transactions than any other funder in 2017. Statistically speaking, crowdfunding has gone from being a fringe activity to one of the most likely avenues that early stage businesses will go down to secure funding in a very short period of time.
With the marketplace model, trust is extremely important on both sides: investors need to trust that they are getting access to the best investment opportunities, and companies need to trust that we will work with them to execute a successful funding round; trust and building great relationships is of the utmost importance to us and at the core of our offering.
UP: You arrived on the scene as a challenger brand, moving from the fringe to the mainstream, how has Crowdcube’s brand changed along this journey?
MC: The Crowdcube brand has always been intimately linked to the crowdfunding industry as a whole - us being the first and largest organisation in the space globally. As acceptance of the industry and awareness has grown over time, so too has our brand with over 700,000 registered investors growing at a rate of around 2,000 per week.
We still view ourselves as a challenger, but more and more later stage and established brands are putting their trust in us, and in crowdfunding, to give their customers the chance to become shareholders. It’s a very exciting time for our business and for the industry as a whole.
UP: Are there any businesses out there that you see as challengers to Crowdcube?
MC: Honestly, growth for us is linked to our ability to give our registered investors the chance to invest in an ever increasing number of great companies. Our focus is on working with the incumbent investment community, our network of partners and our investors to help businesses raise growth capital.
We are the largest equity crowdfunding platform by any meaningful metric anywhere in the world, but that is not to say we’re complacent. We know there is still a lot of work to do in terms of growing the market, raising awareness regionally in the UK and in new markets in Europe. We also want to continue to help address the gender bias which still exists when either raising money for, or investing in an early stage business. These are challenges we factor into all stages of our strategy.
UP: Looking inside the organisation now, who would you say are your key interactions within the organisation?
MC: Perhaps the most important is the COO. We structure the sales funnel as such that I take the top segment, focused on origination, partnerships and relationship building, and the COO takes middle and bottom segments, which are focused on client services, completions, legal and compliance.
I also work closely with the CMO, this relationship resulting in the creation of the Sales Operations team that blends performance marketing and sales support into one function. This helps substantially in the high-touch / mid-touch / low-touch approach my team pursues with different types of clients. It also allows us to follow our mantra of ‘relevant and just in time’ in our approach to origination and performance marketing.
UP: Ending on a broader question, what are the big developments that you see stirring in the market whether that be financial services or technology?
MC: Regarding the crowdfunding industry, I think that we will continue to see large consumer brands, or companies at a much later stage of growth open up part of larger funding rounds to their communities and customers. Companies are beginning to register the economic benefits of converting a customer or user to a shareholder.
These individuals become the biggest brand promoters, have the lowest propensity to churn, the highest lifetime value and basket size; by whatever metric you use, converting a consumer to a shareholder will result in a spike and the data paints a very compelling picture.
Moving into technology, blockchain and its potential is a very exciting area for us and financial services as a whole. A lot great work is being done on the this, in London specifically, and we are investigating its applications for use in areas such as secondary markets and share registers.
James Burrows and Andrew Duncan co-lead the Commercial practice at The Up Group. In order to provide our clients with insight, we regularly meet with Commercial leaders across industries to uncover trends and themes that can help all leaders improve their own business.
The Commercial interview series spans B2B and B2C businesses, uncovering common themes and shifts in how organisations build brand, acquire and maintain customers and grow revenue.