NEWGALEXY, the Glasgow-based legal process outsourcing specialist, has become the first Scottish business to raise finance through Crowdcube, the equity crowdfunding platform.
The company set out to raise £100,000 through the scheme, having made 10% of the firm's overall equity available to investors via an online share issue.
However, it has more than doubled that target and brought in £220,000 from 128 investors, stretching the equity held by "the crowd" to 22.1%.
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The take-up means the NewGalexy pitch is the second most heavily subscribed on the Crowdcube platform in percentage terms to date, though Crowdcube has raised more for businesses in other pitches.
NewGalexy, which has offices in London, Chicago and Mumbai, plans to use the funds to develop the services it provides to law firms and large corporations.
It has ambitions to launch a new software platform within the next 12 to 18 months with support from Scottish Enterprise, and to expand its headcount from 13 to 50 in the next year and a half.
Sarvarth Misra, who founded NewGalexy's European business with Robert Glennie, said the firm turned to crowdfunding after finding it difficult to identify the right investment partner in Scotland.
He also said the process of securing equity backing was not quick enough to support the rapid growth it was achieving.
Mr Misra said: "The early success of crowdfunding in the US and the UK led us to consider this method of raising new equity investment. We run a business which is innovative and changing the way traditional legal support services are delivered. We saw that crowdfunding has the same innovative approach - for early start businesses which are looking to raise external equity. In the end we've been very pleased with our choice of going down this route."
Exeter-based Crowdcube, which has a pool of 52,000 investors, has raised £16 million for 84 companies since its launch in 2011. More than half of that amount - £11.8m - has been generated in 2013.
Company co-founder Darren Westlake said investors' response to the NewGalexy pitch was a vote of confidence in the firm.
He said: "It is a company that has got a great product. It has got a great market and above all I think they have got a good team behind them as well.
"We have done surveys of our investors and those are two things that investors are really looking for, particularly the team."
NewGalexy's success with Crowdcube has raised the prospect more Scottish companies will embrace crowdfunding as a method of raising finance, after a report by Glasgow Chamber of Commerce revealed a low take-up among firms north of the Border.
Mr Westlake concedes that UK crowdfunding activity continues to be focused on London and the south east of England. But he hopes to convince more Scottish companies about the benefits of the concept at an event his firm is hosting with law firm Harper Macleod in Glasgow tomorrow.
Mr Westlake said: "It just seems that outside of the south east there does not seem to be the same awareness of crowdfunding as there is in London. Scotland seems to be the same.
"The reason we are holding the event on Wednesday with Harper Macleod is we are trying to raise awareness in Scotland and make small businesses aware that if they are looking to raise money then crowdfunding really is a viable option."
Mr Westlake added it is not uncommon for firms to raise funds two or three times on the platform. He also said many investors have funded more than one business. Mr Westlake added: "Gradually people are starting to build up a portfolio of investments. Clearly that is the most sensible way to invest in these kinds of businesses. We do try to encourage people to invest as many times as they can so that they can get the most out of these kinds of investments."