River Cottage serves up £1m in mini-bonds to investors via Crowdcube in just 36 hours
River Cottage, the restaurant and food business, made famous by co-founder Hugh Fearnley-Whittingstall for championing home-grown, seasonal food, has raised £1m on crowdfunding platform, Crowdcube, attracting 283 investors in less than 36 hours.
The River Cottage Bond, which allowed private investors to make an initial investment of £500 or more, and pays out 7% fixed interest per annum, will allow the company to expand its award-winning chain of restaurants. Bond-holders also get 10% off at River Cottage’s three Canteens in Axminster, Bristol and Plymouth and free River Cottage membership, with access to a range of exclusive benefits.
Founded by chef Hugh Fearnley-Whittingstall and Rob Love in 1998, River Cottage is a pioneer of SLOW (seasonal, local, organic and wild) produce. With over 20 books, 12 television series, an award-winning cookery school and three Canteen restaurants, the money raised through the River Cottage Bond will help its restaurant chain expand by opening four more locations across the South of England by 2018.
Joint Managing Director, Rob Love commented: “We’re thrilled that the River Cottage Bond was so well received by investors. I am a huge advocate of crowdfunding and this new innovation from Crowdcube helps reduce the cost and complexity of raising finance and provides an effective way for more established brands, like River Cottage, to raise growth funding without the banks.”
According to Hugh Fearnley-Whittingstall, who has the role of Creative Director and is the public face of River Cottage: “The River Cottage brand grew out of our SLOW food ethos and that remains at the heart of the business. We’re committed to helping people eat amazing food and this investment opportunity means we can continue to do that to more people in more places. We’re passionate about our business and we want our investors to be as well.”
Luke Lang, co-founder of Crowdcube, which saw its first mini-bond campaign successfully launch last week, adds: “It’s been an exciting time for disrupting the mini-bond market – Chilango’s Burrito Bond was the first to launch and now the River Cottage Bond. We’re determined to make investing more accessible, affordable and rewarding, whilst giving established brands an effective way to source expansion capital and engage with their customers in a more meaningful manner. ”
A mini, or retail bond is an unlisted bond usually issued by companies directly to their customers and the general public. John Lewis, The Jockey Club, Hotel Chocolat, Ecotricity and Good Energy are some of the well-known UK brands that have successfully issued mini-bonds. Capita Registrars estimate that the value of the mini-bond industry will rise to £8 billion by 2017 (from just under £90 million in 2012).
To date, launching a mini-bond has been a time-consuming and expensive process as each bond was bespoke for every issuer. Issuers had to contract financial advisers, lawyers, tax advisers, FCA authorised compliance advisers, receiving agents, registrars and marketing partners, to help to distribute the bond and could easily rack up upfront advisory fees well in excess of £100,000, making this fundraising route prohibitive for most SMEs. Mini-bonds are unsecured, non-convertible, non-transferable and do carry risk.
The Crowdcube Mini-Bond
Crowdcube’s mini-bond offering is FCA-authorised and simplifies the process, reducing these high upfront cash costs with a percentage success-based fee. This unique new approach takes a lot of the pain, cost and time out of the process, helping more SMEs to bring their fundraising to market much faster. The advisory team working with Crowdcube, have advised on the majority of mini-bonds issued to date, which have raised over half of the total funds generated by mini-bonds in the UK.
As the world’s first and most successful equity crowdfunding platform, Crowdcube enables entrepreneurs to bypass the traditional business angel, venture capital or bank finance routes, giving them more control and access to more investors. For investors, Crowdcube provides them with a way to cherry-pick a stake in an innovative business that traditionally would have been restricted to corporate investors.
Since February 2011, more than 73,000 savvy investors have registered with Crowdcube, helping to raise almost £26 million of equity finance for over 120 UK business pitches.
Investing in mini-bonds involves risk. Mini-bonds are unsecured, non-convertible and non-transferable, and it should be done only as part of a diversified portfolio. Crowdcube is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. Crowdcube is authorised and regulated by the Financial Conduct Authority (No. 572026).