In a move signalling the growing maturity of crowdfunding as a means to invest and raise capital, the Crowdcube Venture Fund will allow passive investors to build up a portfolio of investments by co-investing in ventures which have been screened by a professional fund manager.
The venture, believed to be the first of its kind, will see Crowdcube source the investments, with Strathtay Ventures, a subsidiary of the AIM-listed Braveheart, managing the fund.
The fund will aim to take advantage of EIS (enterprise investment scheme) and SEIS (see enterprise investment scheme) tax reliefs.
But while the minimum investment for some EIS schemes start at about £25,000, the unit size for the Crowdcube Venture Fund has been set at £2500 in order to bring in a broader range of investors.
Braveheart chief executive Geoffrey Thomson said the fund manager will aim to manage a "balanced portfolio" of 10 investments for each investor, with start-up and later-stage investments included. It will "shy away" from retail investment because so many crowdfunding ventures focus on this sector, he said.
Investors will be accepted into the fund on a case by case basis and can subscribe on more than one occasion during an initial two-year investment period.
Mr Thomson said Braveheart had been studying the crowdfunding sector in recent years and moved to act as the market grows and the Financial Conduct Authority (FCA) consults on how to regulate it. He said its due diligence had identified Crowdcube as a partner because it was established and due to the investment it has raised. Last year, the website raised £12.2 million for 54 UK firms. NewGalexy, the Glasgow-based legal outsourcing business, was the first in Scotland to use the platform, raising £100,000 via Crowdcube last year.
Mr Thomson said crowdfunding has emerged as a credible option, stating: "People said originally that it would probably go away, but it won't go away. It is here to stay and it is growing.
"We need to work with these guys. I think they have a refreshing approach, actually."
Darren Westlake, chief executive of Crowdcube, said: "It makes sense for us to partner with Braveheart, which is an established, quoted fund manager with a strong track record.
"Many investors are attracted to the idea of crowdfunding but lack the time to fully research opportunities and monitor the progress of a diversified portfolio. This fund offers them a tailored solution."
Shares in Braveheart closed the day unchanged at 11p.