With our crowdfunding campaign well underway (Link to raise page here) and with nearly £500k raised to date we're getting lots of questions from our riders who want to take part in this exciting time with us... So we decided to compile a blog post answering the most common questions and giving some more background on investing! Ladies and gents, welcome to Crowdfunding Investing 101!
Investments of this nature carry risks to your capital as well as potential rewards.
What's the minimum investment?
Short answer, £10! The average investment across Crowdcube is around £2,000 as it can range from £10 up to no maximum, so it's really for everyone to get involved with.
Assume I invest £100, walk me through the benefits...
Fantastic! First of all, thank you for investing in our awesome business. Now that you're investing £100, you'll receive the following benefits:
1. Firstly, as an EIS investment you'll get 30% of the investment value off your tax bill (assuming you are eligible as a UK tax payer). So that's a value of £30 off your tax bill.
2. Secondly, for £100 invested, you'll get the following Boom Cycle rewards = 3 rides (value £52), plus a shake (value £5) plus some guest passes and an exclusive T-shirt. So that's benefits of £57 for the 3 rides and shake (let's ignore the guest passes and t-shirt for this example).
So, in total, the value of rewards and benefits between our rewards and the EIS allowance is £87!
Finally you will of course then also receive share(s) for your investment, meaning you'll own a piece of the company and benefit from any increase in value down the line.
FYI Whilst all previous investments have been EIS eligible HMRC will not confirm this until after investments have been made and you should always source your own tax advice on your personal circumstances and eligibility for EIS relief.
So how do I make a return on the shares?
As with any shares, be it private or publicly traded, the idea is that the value/price of the shares goes up in value and any increase in value is then passed onto the shareholder(s) when those shares or the company are sold.
Whilst it's impossible to be definitive about where a share price will end up, we of course plan for it to go up, so purely as an example let's assume the value increases threefold (we cannot guarantee that it will increase as share prices can go up as well as down).
In our example, we assume we achieve a sale and your £100 investment is sold for a three times value of £100.
£357 = 100 x 3 plus £57 of benefits
£287 = return (£357 less cost of shares - £70)
So with benefits included it's a return of 5.1 times.
Ok...What's the downside?
Well of course there is always the chance that the company will not achieve its goals or worst case scenario it goes out of business and you lose the investment. However should the worst happen then the EIS investment steps in and eligible investors will receive up to 45% tax relief on the at-risk capital. So using the £100 investment again, should the shares end up being worth nothing:
£30 initial tax relief
£70 at risk capital (ignoring the rider rewards)
£31.50 further tax relief
£38.50 is the actual loss (again ignoring the rider rewards).
If we take into account the £57 worth of rewards given the loss would actually be £0.00.
You can find out more about the EIS scheme for investors here: https://www.crowdcube.com/pg/e...
Can I sell my shares at any time?
In short, yes. You are able to sell your shares at any time to either the existing investors (there will be a much larger pool after crowdfunding) or to friends, family or anyone that wishes to buy in. As the shares will not be publicly traded it'll be up to you to find someone to sell them to.
Gotcha. Now where can I find out more?
Head to our live pitch page on Crowdcube which you can find at https://crowdcube.com/boom-cyc... where we have more information and details, as well as news updates on the company and you can publicly raise any queries you may have on the discussion platform related to our crowdfunding.
Will I have another chance to do this?
Probably not, we have only planned to do one raise via crowdfunding so do not expect to do it again. You never know what's around the corner so we may, but currently there are not plans to open up investment again.
And what if I invest £1,000?
Let's go through it with the new amount!
1. Boom Cycle Rider Rewards = £324
£160 worth of rides
£50 worth of shakes
£115 of discounts on rides for 12 months (based on average usage)
2. EIS Tax Relief
Total savings and benefits combined: £624
What are the funds for?
We are raising funds primarily to open site no 5, to date we've always raised money through institutional/professional investors and while they are taking part in this round we also wanted to open it up to our riders and the public. We also plan to invest in existing sites and grow new revenue streams.
BOOM! Any questions, holla at email@example.com or feel free to raise a discussion on our Crowdcube platform: https://crowdcube.com/boom-cyc...