Based in Glasgow, NewGalexy specializes in legal process outsourcing and the business has become the first firm in Scotland to raise money through an equity crowdfunding platform called Crowdcube.
Through the scheme, the company planned to raise £ 100,000 after it provided investors with an opportunity of investing in 10 percent of the overall equity of the firm by issuing shares online. However, the firm raised more than double the amount it required after 128 investors brought in £ 220,000 and this has stretched the equity that ‘the crowd’ holds by 22.1 percent.
This take up simply means that NewGalexy is ranked second among firms on Crowdcube platform that are subscribed on heavily to date, even though this crowdfunding platform has raised more money for firms in other pitches.
With its offices in Mumbai, Chicago and London, NewGalexy is planning to use these funds for developing the range of services it offers large corporations and law firms. According to its ambitious plans, the firm intends to launch new software program within a period of between 12 and 18 months with the support it receives from the Scottish Enterprise as well as expanding its headcount to 50 from the current 13 by the next one and a half year.
According to Sarvarth Misra, the co-founder of the European business of NewGalexy with Robert Glennie, they decided to turn to peer to peer lending after they found it rather difficult to get the right partner to invest in their business in Scotland.
In addition, he added that securing equity backing was a relatively slow process and couldn’t support the fast growth pace the business was achieving. He said that the early success that their crowdfunding campaign achieved in UK and US led them to consider this method to raise new equity investment. The business that the firm runs is highly innovative and aims at changing the delivery of legal support services. Mr. Misra said that they realized that crowdfunding websites also uses a similar innovative approach and it is an effective of raising external equity. The firm is very pleased with its decision of following this route to raise the money that they need.
Exeter based Crowdcude that has 52, 000 investors has managed to raise £ 16 m for 84 businesses after it was launched in 2011. Of the amount, 11.8 million has been funded in 2013 alone. Co-founder of the company, Darren Westlake says that the response of the investors to NewGalexy pitch was due to the confidence they had in the firm due to its great product in addition to having a great team behind it as well.
The success of NewGalexy with this crowdfunding site means that more companies in Scotland will consider raising finance through crowdfunding. Mr. Westlake continued to say that it is common for some companies to raise money several times on their platform. In addition, he noted that some investors have funded several businesses and they encourage people to make as much investments as they can to benefit more from such investments.