How Offers Are Priced

This page explains how the price of a campaign gets set, and what part we play in it.

Usually the price is not ours

Where a professional or lead investor is setting the valuation and the terms, that is the price. We review it, and we will not run a campaign at a price we cannot stand behind, but we do not set it and we do not change it.

Where there is no lead investor, the position is different. We explain it below.

Where there is no lead investor

Some companies come to us without an investor already setting terms. In that case we may suggest a price, and because we do, the European crowdfunding regulation requires us to tell you how.

Our first preference is not to price the company at all. Where there is no lead investor, we ordinarily use a convertible. That means the valuation is deferred and settled later, by a larger priced round led by professional investors, rather than argued out now on thin information. What is agreed at the time is the discount and the cap that will apply to you when that later round happens.

A discount means you convert at a better price than the investors in that later round. A cap sets a ceiling on the valuation used to convert your investment, however high the later round is priced.

Valuing an early stage company with no market and no lead investor is guesswork, and a convertible is a way of not pretending otherwise.

What we look at when a price has to be set

Where a price must be agreed, we prepare a written pricing assessment. We look at:

• what stage the company is at, and what it has actually achieved so far
• its revenue, its growth and its costs
• the price at which the company last issued shares, and to whom
• prices agreed in comparable transactions, in similar companies and sectors
• how much is being raised, and what that means for existing shareholders
• the terms of the instrument itself, including any discount, cap, or right to be paid ahead of ordinary shareholders if the company is sold or wound up

We do not run a formula. There is no model that takes these inputs and produces a number. The assessment sets out the inputs, the comparators and the reasoning, and reaches a range, and the price is agreed within it.

Unaudited accounts

Many of the companies on our platform are young enough that their accounts are not audited. Where the figures behind a suggested price come from accounts that have not been audited, those figures are unaudited, and we are telling you so here because the Regulation requires it to be disclosed in this description.

We also flag it on the campaign concerned. Treat unaudited figures with more caution than audited ones.

Who signs it off

The pricing assessment is prepared by the team that ran the due diligence. Senior management recommends the campaign, and our Investment Committee reviews the assessment as part of approving it. The Committee decides unanimously, with a quorum that always includes a member who is not part of senior management.

The people who source and assess a campaign do not get to approve it alone.

We do not apply credit scores

Crowdbase does not facilitate loans and applies no credit scores to the companies on the platform. Nothing you see on this site is a credit rating.

What a price is not

A price we have suggested is not a valuation of the company and it is not a recommendation. It reflects what was known and what could be supported at that moment. Private company valuations are judgements, they move, and they are frequently wrong in both directions.

Read the Key Investment Information Sheet and our risk warnings before you invest.