The attempt by Ecotricity to buy out Good Energy has been trundling along since the summer. It’s a hostile bid and the target continues to push back, not on the usual basis of the offer undervaluing the future prospects of the business, but on the grounds that the two aren’t a good fit and it would take the company in the wrong direction.

The market had, until recently, been bidding up Good’s share price, tracking modestly below what had been offered, but that began to change at the start of the week and there are two coinciding factors in play here that are worth a second look. With retail energy companies going to the wall – another two failed yesterday – there must be an argument that these businesses warrant a re-rating – and not in a positive way. Their valuations are surely eroded by the sector-wide practices that have been adopted, along with the risk of tighter regulatory oversight going forward.

Secondly, however, there’s clearly some degree of commitment to the cause coming from Good Energy’s shareholders. This morning, Ecotricity updated the market on the latest scale of acceptances for the offer – as of yesterday lunchtime, it was still under 30%, and that includes the fact that the suitor has already amassed a 25% stake. This news has taken another swipe at the prospective share price gains posted by Good Energy, as even with the market sliding, a clear majority of investors are keen to sit tight and buy into the issuer’s commitments to make the world a better place.

The investor breakdown is therefore interesting to look at, with reports suggesting that the general public, individual insiders, and the employee share ownership scheme collectively account for more than 50% of investors. There’s a further 20% held by institutional investors but even here, it seems likely that many here would be aligned with the company’s “mission”.

Ultimately this is a relatively small company – the final offer posted by Ecotricity was seen as valuing Good Energy at something under £70m and at the time of writing the market cap was heading down towards £50m. Can we conclude that companies of this size, with a strong mission and engaged investors, can manage to defend themselves against hostile takeovers, or is it simply that the price wasn’t right this time round? Given the turmoil facing energy companies today, it seems this isn’t just about price. It also underlines the growing awareness that we all need to be doing more when it comes to cutting carbon emissions. The collective action of shareholders through this episode has the potential to become the business case study of the future – and underline how individuals holding shares directly rather than through anonymous funds – might actually be a factor in making the future that bit brighter.


We’re delighted to announce the appointment of Stephen Garland to our Board of Directors. As we addresses the challenge facing thousands of privately held growth businesses in the UK, where owners are seeking to raise additional capital and shareholders or bondholders are looking to realise the value of their investments, Stephen makes a strong addition.


Stephen says, as part of our announcement:

“CrowdX has identified both a key challenge faced by many growth businesses seeking financing – and critically devised a hugely intelligent solution to address this. Success here would pave the way for many smaller companies to access the funding they need to become the significant employers and economic contributors of tomorrow. I look forward to helping CrowdX deliver against this ambition.”


Stephen’s a highly regarded, hands-on executive with a global technical, development, and data analytics background and his appointment as a Non-Executive Director of our Board augments his current role as Chief Technology and Product Officer at Trustpilot.


Mike McCudden, our CEO commented on the appointment:

“I speak for the whole CrowdX team when I say how pleased we are that Stephen has agreed to join our board. His commitment to the CrowdX project underlines the scale of change we can deliver when it comes to helping grow the businesses of tomorrow and the first-hand experience he brings to the table will be invaluable.”


The CrowdX solution enables companies to seek investment via debt or equity, whilst offering liquidity to existing investors – without the need to utilise public markets. Services include independent business valuations, cap table management, carbon reporting, secondary market liquidity, and the management of investment rounds.

HM Treasury has launched a consultation on the regulations surrounding the publication of prospectuses ahead of debt or equity issuance. This has been triggered in the wake of Lord Hill’s review of the UK listing regime and as advocates of public capital market reform, this is something the team at CrowdX are very keen to welcome.


Mike McCudden, CEO of CrowdX, commented:

“CrowdX is the new secondary market for the trading of private company securities. Although the current listing regime does offer some scope for smaller issuers to access capital markets, often they will find themselves constrained by disproportionately high costs when it comes to meeting their statutory obligations. As a result, this can lead to fast-growth companies either selling out to larger competitors or having to rely on expensive bank lending to fund expansion. The public capital market in these situations is unable to serve the needs of the public in general.”

CrowdX is actively engaged in the consultation, with highlights of our response including:

  • Applauding the idea of listing reform, most notably as a result of the imbalance which currently exists between listing venues in the UK. Allowing smaller markets to devise their own admission and listing requirements can result in a lack of transparency for market participants, so ensuring the prospectus disclosure details are standardised here would improve the quality of the UK market.
  • Also, affording greater discretion to the regulator in terms of when an issuer needs to publish a new prospectus would also greatly enhance London’s appeal as a listing venue, as would the ability to streamline dual listing applications from those already traded on exchanges in third countries. We see CrowdX as being well positioned here to have the necessary flexibility when it comes to assisting those wanting to raise a modest amount of capital in the UK.

We have provided a fuller response to HM Treasury in the consultation document and believe that progress here will truly enhance the UK’s allure as a venue for raising capital. Any successful listing reform will need to be driven by a commensurate focus on the technology to enable this to integrate into the modern financial world. The automated processes we have developed at CrowdX are just one such example of how we intend to help drive the UK’s future success on the global financial landscape.

We’re delighted to announce that Paul Atkinson has been appointed a Chairman of CrowdX. Paul has a recognised track record of building value for companies in the technology and services sector. He is a founding partner of venture capital firm and EIS fund manager Par Equity, and chairman of talent solutions business Taranata Group. Paul is also a Visiting Professor of the Napier University Business School and Chairman of Converge Challenge, a catalyst for accelerating the creation of innovative products and services from Scottish universities.

Mike McCudden, CEO of CrowdX, commented:

“On behalf of the entire CrowdX team, I am delighted that Paul has accepted the role of Chairman. His track record as both a successful entrepreneur and a visionary angel investor means that he is acutely aware of the value a vibrant secondary market can offer privately held businesses.”

“As CrowdX embarks on its mission of transforming capital markets for the businesses of tomorrow, having the support of such highly respected members of the business community will prove vitally important in helping shape our future.”


Speaking on his appointment, Paul Atkinson added:

“Creating liquidity in private capital markets presents a tremendous opportunity. As an asset class, this sector already generates significant wealth, but by facilitating liquidity, CrowdX is opening up a range of investment opportunities that tinified  would otherwise be difficult to access. I am delighted to be involved with the high-quality team who are bringing this concept to market.”


CrowdX members experience the benefits of being a public quoted company, without the barriers and associated costs. A number of companies have already expressed an interest in signing up to the CrowdX service, including a number of football clubs that were formerly listed on traditional exchanges.

How to fund that next round of expansion is an almost inevitable challenge faced by the vast majority of growth companies. The support of ‘friends and family’ has likely been exhausted even if borrowings have been repaid and regardless of the health of the cash flow, once it comes to finding that critical seven or eight-figure sum, difficult choices have to be made.

Handing over a large slab of hard-earned equity to an investor, who is in turn likely to take an ‘active interest in your business and management style has the potential to be a hugely fruitful collaboration – although for many entrepreneurial founders, this could prove to be a significant constraint on their own ambition.

Another option on the agenda is debt and although benchmark interest rates still sit at historical lows, bank risk managers are unlikely to look terribly sympathetically at this sort of proposition. That means either opting to post significant collateral to underwrite a loan, being saddled with a high-interest rate and a series of punitive covenants to match, or even looking at the complex task of issuing bonds. Many businesses have had to make these tough calls and although some have succeeded, questions have to be asked as to at what price – and how many have been suffocated by these constraints?

There is however a third option on offer to growth companies, allowing them to tap into the potential of institutional, sophisticated, and managed capital, not only to raise funds but also to see a secondary market exist in their securities, be they debt or equity. This isn’t a wholly new construct, but by tapping into the latest technology, processes, and regulations, CrowdX has developed a formula that offers companies the ability to grow or reorganise their cap table, whilst being accessible to all.

To that extent, we’ve built a structure that replicates what any listed company enjoys – albeit without many of the more arduous and expensive elements. Automated valuation tools and integration with the latest accounting software then supports the credibility of the offering alongside an ESG rating and carbon reporting metrics. All issuers are still subject to listing requirements and public scrutiny of their performance, but can now raise equity without the risk of being beholden to a dominant shareholder.

Any raise can be tailored to individual issuer requirements and executed in the most appropriate format. Conversely, investors get the opportunity to support one or more businesses they truly believe in. What’s more, the presence of an active secondary market fuelled by multiple API connections for sources of liquidity means that we can provide a truly differentiated proposition here, something that is often demanded by those who invested at the outset and provides an added draw for including early-stage investments in a diversified portfolio.

Historically, founders have too often been caught between a rock and a hard place. Either they were obliged to hand over control of much of their business to third parties in an equity sale, or left hamstrung by expensive borrowing and restrictive covenants. CrowdX wants to ensure growth companies of any size can tap into a vibrant market, providing benefits for issuers and investors alike, thus ensuring that the public market can always serve the public good.

Big corporate news over the weekend revolves around directors of WM Morrison recommending the 254p per share bid from Fortress. Not only is this around a 10% uplift from the previous offer made by CD&R – another US private equity firm – but it also comes with a raft of promises to protect multiple caveats of the business. WM Morrison owns rather than rents much of its estate, and is also recognised for its commitment to supporting British food producers, especially farmers. The Fortress bid comes with assorted pledges to maintain the status quo here, but are these worth the paper they’re written on? After all, even informal market watchers will still be aware of the high-profile incident when Cadbury was bought by Kraft back in 2010. It promised to keep UK manufacturing sites open – that didn’t last.

So, the prospect now is that further offers will be flushed out, as it seems clear there’s a bargain to be had, here. Another private equity group – Apollo – is rumoured to be looking around in a move which has sent the Morrison’s share price well above levels the bid from Fortress reflects. Investors could soon be asked to show their true colours. Accept a lower priced – but still generous 18 times earnings – offer from a consortium who are pledging to look after staff and suppliers, or accept a higher price from someone with what could be considered a more traditional approach when it comes to return on investment?

Unless those pledges made by Fortress are somehow made irrevocably binding and won’t simply see parts or all of the business being sold on in due course, are investors really wise to buy into promises of good corporate citizenship from what will become a private company with no true external influence on its direction? As much as it pains me to say it, perhaps the wise money takes the highest price on the table then uses the proceeds to find a new investment with values that align with their own.

Unbeknown to many, start-up, growth and scale-up (SG&S) businesses have had a large part to play in changing the equity investment landscape over the past few years. Starting with the introduction of the Equity Investment Scheme (EIS) in the UK in 1994, investors have been incentivised to support these SG&S businesses. With the changes in technology that allow investors to meet online and invest smaller amounts into a number of firms it is no surprise that crowdfunding has shown itself to be as popular as it is. Crowdfunding is an effective mechanism for access to growth capital for businesses and it is an investment vehicle for investors.

This combination of businesses looking for funding and investors looking for distributed access to SG&S companies has meant that crowdfunding sites across Europe reportedly raised between EUR 5.4Bn and EUR 6.8Bn in 2017. For the last few years, SG&S businesses have had what those before them never had: an option other than angel investors to help fund their businesses through equity.

For an investor, supporting a brand they understand, instead of a complex corporate is an exciting prospect. How many retail investors, for example, can pick up the latest financial results of a complex business like Barclays and give a confident view on the prospects of the firm, and then decide whether to invest, disinvest, or do nothing? Yes, some SG&S businesses are also complex but, the majority are far less so; they tend to focus on one core area of business as they grow into their markets. The opportunity to invest early on in the lifecycle of a business is exciting and, like all things, knowing when to start and when to stop is crucial to a successful outcome.

For an SG&S business, gaining access to much-needed capital, often from those that make use of their product, is an exciting marketing tool and a way of really connecting with your customers. Millions has been invested through the crowdfunding model and many successful companies can attest to the benefits of this model. Unfortunately, when raising capital SG&S businesses are limited by the inability to predict when or how investors will receive a return on their investment.

Investors are looking for a market where they can invest at a time that is right for them, not only during the crowdfunding round which is often at a single point in time, during a limited window in the business’s life. If an SG&S business is able to provide this flexibility for investors, then new capital raises would become far easier and, increasingly mutually beneficial for both the business and its investors.

Alas, we invest to make a return and if we are unable to realise a return, what’s the point of putting money into something investor can never realise a return on? Sure, there are those companies that go on to an initial public offering (IPO), perhaps pay a dividend, or maybe a venture capital (VC) or similar buys out the investor’s portion of the equity. In each case, unfortunately, the investor is not in control and can often go many, many years without realising any real return at all.

As the financial markets continue to evolve, and as crowdfunding matures, a secondary market becomes more and more important, if not entirely necessary, to continue this evolution. Furthermore, as investment into SG&S businesses becomes more accessible to the average person, and not only accessible to the few angel investor and venture capital businesses, so investing becomes truly democratised.

CrowdX aims to create the secondary market for transacting in private and crowdfunded equity. CrowdX doesn’t run initial capital raises; we simply help create liquidity after the firm has raised capital through an existing crowdfunding site. CrowdX thus operates across the crowdfunding industry and prefers to partner with crowdfunding sites instead of competing with them. We operate a wholesale market only, meaning that a retail investor can’t trade directly through our platform, but that investor can trade on our platform through their broker. If you wish to list your firm, please contact us.

Early investors in a start-up, growth and scale-up (SG&S) businesses are the heroes of our businesses: they take a chance on the founders and their vision. Crowdfunding allows many people, or entities, to invest in and support SG&S businesses, often with no known exit method. It is widely agreed that a secondary market is the natural and essential evolution of the market. A secondary market is becoming increasingly important for the investor, but what about for the company raising the money? Why should they allow their stock to be transacted on after the initial raise?

Firstly, to address a concern which some firms face; is the public nature of having your firm’s equity tradable. By doing a crowdfund, a business already moves into the public domain. Investors have paid their money across to a business they believe in, and the investors want to realise a return on their investment. As a result, the investors are well within their rights to seek information on the progress of the business and their investment. Being in the public eye is not for all companies, but it is a powerful manner in which to engage customers in the brand and generate required growth capital to help build the business. Below are some of the advantages of listing on CrowdX:

1. Capital and process efficiencies
Over and above the engagement with investors, by having a company’s equity traded in a secondary market, the business should gain some major capital and process efficiencies. The management of corporate action like dividend payments, share splits, buybacks and other events in a growing company’s life are taken care of by the operating marketplace. Processes for awarding and incentivising staff and other key stakeholders becomes possible in a fair, transparent and simple manner.

2. Fair valuation method
By having a method of valuation, driven by supply and demand, a business positions itself well for further investments, either through future crowdfunding raises or through Venture Capital (VC) or Private Equity (PE) partners. CrowdX works with the firms that will be undergoing an additional funding round to ensure there is no price manipulation prior to a new funding round.

3. Larger initial capital raises
Notifying potential investors during the crowdfunding round that they will be able to sell all or portions of their positions should result in larger capital raises. There is value in the ability to take partial or full profits at a convenient time and investors should be pricing this into their investment hypothesis.

4. Future negotiating leverage
VC and PE firms and angel investors have, for many years, been able to operate from a position of strength. They hold the money and have experienced teams that are able to negotiate what they want out of a deal. Having the equity of a firm tradable on a secondary market levels the playing field and positions the business with a valuation which is undisputed and can be used by the firm as leverage in a negotiation at a future point.

5. Staff and shareholder incentivisation
Furthermore, businesses which allow the transacting of their equity on a secondary market create an incentive for their staff and other shareholders by providing a valuation and a means of converting what is often earned as ‘sweat equity’ into real cash. Sweat equity is the non-monetary investment that owners or employees contribute to a business venture. Startups and entrepreneurs often use this form of capital to fund their businesses, by compensating their employees with stock rather than cash.

CrowdX will soon offer initial raises and secondary raises for growth companies. A retail investor can’t trade directly through our platform, but that investor can trade on our platform through their broker. If you wish to list your firm, please contact us.