BrewDog taps beer drinkers for £4m to fund expansion plan

Fast-growing company which trumpets its 

punk credentials will offer 

42,000 shares to the public

Jennifer Rankin

The Guardian, Thursday 20 June 2013 16.01 EDT

Brewer and bar owner BrewDog wants beer drinkers to
crowdfund its expansion. Photograph: Keith Erskine/Alamy

Brewer and bar owner BrewDog is hoping to raise
£4m from beerdrinkers to fund its expansion plans.

The fast-growing company, which trumpets its punk
credentials, will make 42,000 shares available to
the public at £95 each, to fund a sevenfold increase
in production at its Ellon brewery near Aberdeen
and open its first shops, starting in London.

James Watt, BrewDog co-founder, claimed the
so-called "equity for punks" scheme was the
world's largest crowdfunding initiative. The share
sale underscores how many entrepreneurs are
turning to the public to raise money, rather
than use banks or venture capital funding.

"As we need funds for more growth plans,
we never considered a bank or an investment
group," Watt said. "[Equity for punks] proves
that there is a viable alternative to the
financial establishment. As the self-interested
banks continue to stunt economic growth,
people are looking for better places to put
their money

This is the third time BrewDog has sold
shares direct to the public, after hitting
targets to raise £2.2m in 2011 and
£750,000 in 2009, through similar
crowdfunding schemes.

The Aberdeen-based company has
recorded average annual growth of
167% over the last five year and hopes
 to hit turnover of £20m this year. The
owner of 12 bars in the UK and one
in Stockholm, it is also planning bars
in São Paulo and Tokyo.

BrewDog shareholders will get a
lifetime discount on the company's
portfolio of more than 30 beers,
which include its top-selling Punk IPA ,
as well Dead Pony Club and Hardcore IPA.

Founded in 2007, BrewDog revels in
pitting itself against what it calls
"the status quo of fizzy mass-produced
tasteless lagers". At its annual meeting
on Saturday existing shareholders will
enjoy beer tastings and punk rock.

EBay-Style Peer Loans Spur Wall Street Asset Craze

By Ari Levy & Dakin Campbell - Aug 27, 2013 5:01 AM GMT

Bloomberg Markets Magazine

On a June morning in midtown Manhattan, more than 300 investors cram into a conference room at the Convene Innovation Center, nibbling on pastries and waiting for Renaud Laplanche to take the stage. As founder and chief executive officer of LendingClub Corp., Laplanche has rock star status at this inaugural LendIt conference, where Wall Street investment managers clamor for insight into the world of peer-to-peer lending. Laplanche, 42, a French securities lawyer turned Silicon Valley entrepreneur, expects San Francisco-based LendingClub to originate $2 billion in loans this year and double that in 2014. As he takes the stage, he’s fresh off a $125 million investment led by Google Inc., Bloomberg Markets magazine will report in its October issue.

Armed with a muscular board that includes former Morgan Stanley CEO John Mack and former U.S. Treasury SecretaryLawrence Summers, Laplanche aspires to create the go-to Internet site for borrowers in need of funds for credit card consolidation, home improvement and small-business expansion.

When Laplanche leaves the stage, he is mobbed by money managers and clients, who spend two hours grilling him about LendingClub’s loan programs.

LendingClub is one of a dozen firms in the U.S., Europe andAustralia whose model is to create a marketplace for loans similar to EBay Inc. (EBAY)’s market for goods and services, with ordinary people lending money to other ordinary people via an online platform.

San Francisco Startups

The other large U.S. peer-to-peer lender is Prosper Marketplace Inc., headquartered two blocks away from LendingClub in San Francisco’s South of Market district.

Prosper expects to originate more than $500 million in loans next year.

“What we’ve done is radically transform the way consumer lending operates,” Laplanche says in his speech. He says that LendingClub keeps staffing low by using algorithms to screen prospective borrowers for risk -- rejecting 90 percent of them - - and has no physical branches like banks. “The savings can be passed on to more borrowers in terms of lower interest rates and investors in terms of attractive returns.”

Prospective borrowers go to the firms’ websites to sign up. If they’re accepted, they pay interest rates ranging from 6.7 percent to 35 percent a year, depending on their credit history, on three- to five-year loans of as much as $35,000. They pay that interest directly to a group of lender-investors, with LendingClub and Prosper acting as underwriters and taking a fee from each transaction. Lenders scan the websites, read over prospective borrowers’ plans for using the money and buy pieces of individual loans.

Bypassing Banks

Masood Raja, an English professor at the University of North Texas in Denton, took out a three-year $3,500 loan from LendingClub early this year to purchase a Vespa motor scooter on eBay. He was assigned a rate of just over 10 percent.

“I liked that I didn’t have to go to a bank,” says Raja, 48. “The idea that small investors would be able to invest in this loan was very enticing.”

Raja says that 72 lenders put money into the loan, buying chunks of as little as $25.

LendingClub says that from June 2007 to July 31 of this year lender-investors earned an average annualized return of 9.5 percent, compared with 0.1 to 1.5 percent in a bank savings account. Prosper’s average return for the period from July 2009 to June 2013 was 9 percent.

Big Money

The new debt category’s high returns have brought Wall Street money managers running, along with pension funds, sovereign wealth funds and family offices desperate for higher yields at a time when 10-year U.S. Treasuries generate less than 3 percent. They’ve offered to take over all of the loans the peer-to-peer lenders can gather in.

The outside investors are now bundling the small loans into much larger pools so they can be more easily sold to big institutions. LendingClub itself runs a subsidiary called LC Advisors, which sells funds made up of LendingClub loans to high-net-worth individuals.

LendingClub is also working with a Massachusetts-based investment firm called Arcadia LLC, which has proposed to up the ante by applying leverage -- that is, take bank loans to fund more loan purchases.

“This is without doubt an emerging asset class,” says Andrew Hallowell, an Arcadia founder.

High Risk

Peer-to-peer loans can be high risk. When they were first introduced, default rates topped 17 percent. The loans remain unrated because the asset class is still too new for Moody’s Investors Service and Standard & Poor’s to take notice.

“The big problem is the whole issue of credit risk,” says Bert Ely, a banking consultant in Alexandria, Virginia. “To the extent the person putting up the money is relying on someone else to do the screening, you have to ask whether this is an appropriate investment for some.”

Peer-to-peer lenders issue their loans through Salt Lake City-based WebBank. They’re regulated by the U.S. Securities and Exchange Commission. Although LendingClub and Prosper recruit borrowers in more than 40 states, in at least 20 of them lender-investors are not allowed to be part of the process.

“If you are going to be a lender in this state, you have to be licensed,” says Ed Novak, a spokesman for the Pennsylvania Department of Banking and Securities. That rule, he says, applies to both banks and individuals.

Online Boom

By 2016, peer-to-peer lenders in the U.S. will be originating $20 billion in loans annually, according to Jason Jones, an organizer of the LendIt conference and partner at New York-based Disruption Credit, an investment firm focused on online lending. That doesn’t include online loan programs not available to retail investors, led by San Francisco-based Social Finance Inc., or SoFi, which may hand out as much as $1 billion in education loans this year.

Brooklyn, New York-based CommonBond LLC is also in the student loan business, while Montreal-based IOU Financial Inc. (IOU) lends online to small businesses.

David Schuette, a 50-year-old network engineer in Lakewood, Colorado, took out a $10,000 LendingClub loan this year to consolidate credit card debt, on some of which he was paying 30 percent interest. LendingClub approved a three-year loan at 9 percent.

“It’s a great idea to have the little guys helping the little guys,” Schuette says.

Bank Credit Slumps

The online lenders owe a debt of their own to the commercial banks, which have cut back on consumer lending. Americans had borrowed $854 billion in open-ended or revolving debt, such as credit card loans, as of the end of June, a decline of almost $170 billion over the July 2008 peak, according to Federal Reserve data.

“The banks are not interested in expanding their business, and they’re bogged down from a regulatory standpoint,” SoFi CEO Mike Cagney says.

Prosper Marketplace, founded in 2005 by Silicon Valley entrepreneur Chris Larsen, was the first U.S. peer-to-peer lender. Laplanche started up LendingClub a year later.

Larsen’s notion was to create an enterprise in which individual borrowers and lenders could negotiate loans, take the risk and keep the profits. His business was just beginning to take off when, in October 2008, under pressure from the SEC, he voluntarily shut down.

A cease-and-desist order followed a month later, alleging that Larsen was selling unregistered securities -- meaning the online loans retail investors were buying. Larsen suspended operations for nine months while he made his company SEC compliant. He left the firm in March 2012.

SEC Action

LendingClub had anticipated SEC action and had been working with the agency since April 2008, when it stopped taking money from retail investors. Six months later, it restarted as an SEC-registered company. To gain that registration, it agreed to automatically file with the federal agency every loan it made as a separate security.

Prosper mimicked LendingClub’s process to gain compliance, yet it wasn’t until July 2009 that its registration was completed. In addition to filing every loan, both companies report quarterly and annual results, as though they were publicly traded.

“We have a regulatory reporting burden that’s unlike just about any private company in existence,” says Jeff Crowe, a LendingClub board member and partner at Palo Alto, California-based Norwest Venture Partners.

Class-Action Suit

LendingClub used the time it gained in the battle with the SEC to jet past Prosper, which made $153 million in loans in 2012 compared with LendingClub’s $718 million.

Prosper was also hampered by a class-action lawsuit, filed in San Francisco Superior Court days after the SEC cease-and-desist order by a group of disgruntled Prosper investors. The suit alleged that because Prosper was selling securities illegally, lenders who had lost money were entitled to be compensated.

The suit was settled on July 19, with Prosper agreeing to pay $10 million over a period of years to the plaintiff class. The company settled without admitting liability or wrongdoing.

Prosper and LendingClub now thoroughly check the credit history of all applicants, they say. Borrowers accepted by LendingClub as of early July had an average credit rating score of 704 out of 850.

Prosper’s annualized default rate for July of this year was 5.8 percent, down from 12.3 percent three years earlier. LendingClub’s aggregate rate of defaults and charge-offs dropped to 2.5 percent at the end of the first quarter of this year from 6.7 percent at the end of 2009.

Revenue, Profits

LendingClub recorded $20.8 million in revenue in the second quarter and profit of $1.7 million. Prosper lost $5.7 million, not including the $10 million legal settlement.

The influx of institutional interest has changed the game.

Hallowell, of Arcadia, has a five-person team in Burlington, Massachusetts, recruiting institutional investors for LendingClub loans through an entity called Cirrix Capital LP. Cirrix is developing quantitative models to determine how the loans will perform in a variety of economic scenarios. Hallowell says Santa Clara, California-based Silicon Valley Bank has agreed to lend Cirrix approximately three times the amount of the capital it raises from investors to buy more LendingClub loans. The bank’s rate: about 4.5 percent.

Prosper has also been pursuing institutional investors since a new management team took over in January. The firm’s board brought in Stephan and Aaron Vermut, a father-son tandem, as CEO and president. They previously ran Merlin Securities LLC, a prime brokerage acquired last year by San Francisco-based Wells Fargo & Co.

Sequoia Invests

The Vermuts brought with them $20 million of fresh equity for Prosper, with venture firmSequoia Capital, known for early investments in Apple Inc. and Google, leading the financing.

After the Vermuts arrived, monthly loan originations tripled to $30.3 million in July from less than $10 million in February.

“We created awareness by selling our business, leaving Wells Fargo and coming here,” Aaron Vermut, 40, says in the company’s new 15th-floor office overlooking downtown San Francisco. “So you’ve got a bunch of Wall Street guys now in the p-to-p business. That’s generated attention, and people said, ‘Look, this thing’s for real.’”

Institutional Limits

Laplanche, a former French sailing champion whose 73-foot (22-meter) trimaran, “LendingClub,” won the Transpacific Yacht Race in July, is wary of the flood of institutional clients. To maintain a diversified investor base, he says that no single investor -- aside from LendingClub’s own LC Advisors funds -- will control more than 5 percent of the loans and that levered deals will fund no more than 15 percent of them.

“We’re trying to build a business for the long run that’s very sustainable and can grow through different credit rate environments,” he says. “We’re putting constraints on individual managers, on our own funds and on any large source of capital.”

The capital continues to flow in.

A corporate pension fund committed $25 million to LendingClub loans in June, a month after a sovereign wealth fund invested a similar sum, Laplanche says, declining to name the institutions. Oppenheimer Holdings Inc. (OPY) has recently started offering LendingClub’s funds to high-net-worth clients.

Mack, Morgan Stanley (MS)’s CEO from 2005 to 2009, joined LendingClub’s board last year and then encouraged the wealth management division of his former employer to sell the firm’s loans to its clients.

‘First Class’

“I saw a first-class product that consumers should have access to,” says Mack, who first put some of his own money into the loans.

As peer-to-peer lending balloons, Prosper founder Chris Larsen, who now runs an electronic currency provider called OpenCoin Inc., looks on with some sadness. His original notion was to democratize lending by taking the profits away from the banks and giving them to consumers.

“This is not an Occupy Wall Street solution,” he says of the takeover of peer-to-peer by big money. If the regulators had permitted him to pursue his original dream, he says, “maybe it could have been.”

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Dakin Campbell in New York at dcampbell27@bloomberg.net

To contact the editor responsible for this story: Michael Serrill at mserrill@bloomberg.net

5 RULES FOR CROWDFUNDING SUCCESS FROM THE QUEEN OF MULTITASKING UNDERWEAR (YOU READ THAT RIGHT)

SET YOUR GOAL BELOW THE ACTUAL AMOUNT YOU WANT TO REACH. AND MORE COUNTERINTUITIVE CROWDFUNDING WISDOM FROM JOANNA GRIFFITHS, THE WOMAN BEHIND KNIX WEAR.

BY: AMBER MAC

Technology probably isn't the first thing most people think of when they think of underwear.

Joanna Griffiths is not most people. While studying at INSEAD, one of the world's largest graduate business schools, Griffiths saw an opportunity to create a product that did more than the existing options on the market. "Thanks to technology, almost everything has evolved, everything but our underwear," she says. "We created a product truly designed with women's needs in mind: underwear that looks great, fits great, and has technology built in to eradicate odor and wick away and absorb moisture."

I KNEW THAT IT WOULD ALSO GIVE US THE OPPORTUNITY TO GAIN INVALUABLE CUSTOMER FEEDBACK--BEFORE THE PRODUCT HAD BEEN MADE.

Griffiths needed a way to fund her new venture, Knix Wear. She had interviewed hundreds of women about the idea while doing her MBA, identifying demand for a stylish lingerie line for women who exercised intensely or experienced light incontinence, and she decided that crowd funding would be the ultimate test. "People had liked the idea, but would they actually pay for it?" says Griffiths. "I knew that it would also give us the opportunity to gain invaluable customer feedback--before the product had been made."

The campaign was a success, surpassing the $40,000 goal (by an extra $20,000). During the Indiegogo experience, Griffiths also learned some crucial crowd funding lessons.

1. Seek out best practices

Before you start your crowdfunding campaign, Griffiths suggests that it's important to study others who have done it well. For her, there were a handful of examples of how to do things right. She drew inspiration from how the Ministry of Supply men's shirtcampaign described their technology; she looked to the Saint Harridan campaign for its storytelling abilities; and she liked how the footwear project, Forus, positioned their wholesale packs.

2. Be prepared to hustle

No matter how much experience you have in the crowdfunding space, it requires a strategic approach to reach--and exceed--your goal. From media lists to ambassadors, Griffiths recommends that you plan ahead as much as possible. This means contacting your supporters before you launch to firm up their promotion and participation, and also developing a thorough marketing plan.

3. Adapt quickly to survive

For many in the crowdfunding world, there are no second chances. Griffiths shares how at just two weeks into their campaign they realized things weren't going as planned and they needed to adapt, quickly. "It was extremely difficult to let go of our preconceived notions and admit that we had launched incorrectly," she says. "But that is part of the beauty of crowdfunding," she explains. "Listen to your customers, as it could prevent you from making costly mistakes later on." Thanks to listening closely to feedback, they re-shot their promo video and repositioned their product to get better results.

4. Make your own rules

While it's key to study best practices, it's also important to seek out your own rules, as crowd funding is a relatively new space and many best practices are still being defined. During the Knix Wear campaign, Griffiths received an email from a major retailer, HBC, saying they wanted to be her first retail partner and were going to pre-purchase product via the Indiegogo campaign. "We were the first campaign to have a major retailer pre-order through crowd funding and we got them by thinking outside of the box. If we had only looked to what had been done before, we never would have reached that milestone." One of the perks that helped to seal this deal was the $800 retailer multi-pack featured as part of the campaign, which includes 48 pairs of Knix Wear high-tech knickers (retail value $1,600).

5. Get tactical and practical

Start your campaign on Monday and end your campaign on a Friday, says Griffiths. It will help you to maintain your momentum. She also recommends that you set your goal below the actual amount you want to reach. "It sounds counterintuitive but people like to contribute to winning campaigns, so if your goal is achievable and you hit it early on, you’ll be more likely to hit your stretch target."

KnixWear is now shipping product to its 518 pre-order supporters and planning for a future in stores around the world.

To Learn More Click Here

Spike Lee Gets Very Heated at Kickstarter Criticism - Bloomberg

uly 31 (Bloomberg) -- Filmmaker Spike Lee discusses kickstarting his latest film project with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Will Santander enter lend-to-save market created to cut out the banks? Tie-up with Funding Circle for business loans on the cards

By LEE BOYCE

PUBLISHED: 17:44, 23 July 2013 | UPDATED: 17:44, 23 July 2013

 
 
 

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Santander: Reports suggest it could be set to team up with Funding Circle

Santander is set to enter the rapidly growing lend-to-save market and team up with one of its biggest players, reports have claimed.

The UK arm of the Spanish bank is in discussions with Funding Circle - which lends money from private investors direct to to small and medium-sized businesses - in a move which could undermine the sector’s position as an alternative to the big banks.

According to the Financial Times, Funding Circle’s ability to tap into the balance sheet of one the UK’s biggest banks will offer it a fast-track boost to its growth.

Funding Circle said it has been in talks with Santander – but the talks are at an extremely early stage, while a Santander spokesman said the FT report is based on 'speculation.'

Funding Circle is one of the three biggest lend-to-save firms – also known as peer-to-peer lenders - alongside Rate Setter and Zopa, the latter two solely focusing on personal loans.

The model has proved a massive success, both for investors looking for an alternative to poor savings rates and small businesses increasingly turned down by high street banks.

Funding Circle says it offers a better deal than traditional banks by linking depositors directly with individuals or businesses looking to borrow.

According to a recent note sent out by Samir Desai, the group’s co-founder, lending remained negative across high street banks in the second quarter, while Funding Circle helped lend £28.4million to businesses.

This is three times the amount lent in the same period of 2012 and 32 per cent higher than the first three months of this year, showing how popularity for lend-to-save is soaring.

More than 17,000 investors now use the site daily and have helped lend more than £120million to 2,000 businesses across Britain in three years.

Interestingly, he points out a recent piece of independent research by Nesta which found 77 per cent of businesses said they would come to Funding Circle for a loan first rather than go to their bank. 

Samir Desai said: ‘This news is further evidence that businesses are attracted to the speed and independence associate with peer-to-peer lending.’

According to a report by the Open Data Institute, the industry will be worth £1billion by 2016. 

But this impressive growth has made it harder to attract sufficient depositors to meet the requirements of businesses looking to borrow, says the FT. 

A potential tie-up between Funding Circle and Santander would let the bank lend alongside the lend-to-save platform’s depositors on larger loans which it might not otherwise be able to help finance. 

Impressive growth: Funding Circle is attracting swathes of investors and small businesses - could teaming up with a bank jeopardise it?

The arrangement could be launched at the end of the year and will give Santander an alternative route into the small business lending market. 

The Government has taken an interest in lend-to-save in recent months and recently invested £20million to lend through Funding Circle alongside private investors, as part of its Business Finance Partnership scheme.

Some in the industry are critical of a potential deal. Stuart Law, founder of lend-to-save platform Assetz Capital, said: ‘The banks are beginning to get concerned as they now know peer-to-peer lending is here to stay – it is no flash in the pan as some initially thought. 

‘However, Funding Circle’s reported involvement with Santander thrusts a spear straight through the heart of the peer-to-peer community. 

‘The relationship endangers the whole market which has worked tirelessly to build trust amongst disillusioned investors and borrowers across the UK by creating a new future for finance that doesn’t involve banks.’

A big drawback of the lend-to-save market is the fact it doesn’t cover investors under the Financial Services Compensation Scheme which guarantees £85,000 per person per institution and they also do not benefit from the £50,000 FSCS investing protection.

Although the industry isn’t regulated, Funding Circle, Rate Setter and Zopa set up a P2P Finance Association last year, which has a strict code of practice, including minimum capital requirements and other systems and controls.

None of the smaller lend-to-save firms have joined due to the stringent criteria.

BrewDog shares target may be hit ahead of deadline

Greig Cameron

Deputy Business Editor

Monday 29 July 2013

THE co-founder of BrewDog expects the company's £4 million crowd funding drive to close before its deadline because of strong take-up from investors.

James Watt said the Fraserburgh firm has already raised £2.5m towards the target since it launched the £95 per share Equity for Punks offer on June 20.

The fundraising was scheduled to close on January 22 next year but Mr Watt believes the full sum will be raised prior to that.

He said: "It will stay open until January unless we reach the target of what we need.

"We have raised £2.5 million in the first month so I am pretty confident it will close before then."

BrewDog wants to use the money to extend the Ellon, Aberdeenshire, brewery it opened earlier this year and boost annual production there ten-fold to 500,000 hectolitres.

As well as that, there are plans to build a brewing academy in London, open specialist beer shops and extend the 12-strong bar chain in the UK and overseas.

Mr Watt: "There is no down time at the moment. We are building [at Ellon] and I am looking at sites in Sheffield then Germany."

A visitor centre, bar, restaurant and shop could also be built at Ellon.

If the fundraising goes as expected, the company also intends to put money into the development of spirits brand Watt Dickie.

The 35% alcohol by volume spirit was launched in BrewDog bars during June this year, initially in six centilitre bottles.

As well as holding the stock, shareholders get a lifetime discount for BrewDog bars and the online shop plus an invite to its annual general meeting which Mr Watt described as "more like a party, with lots of beer and great bands".

The sale of the 42,000 shares, equivalent to less than 4% of the entire share capital, values the business at more than £100m.

The company made a pre-tax profit of £486,000 last year on revenue of £10.7m. Turnover is predicted to hit £20m this year and double again in 2014.

BrewDog, which employs more than 180 people, was named as the fastest growing food and drink company in the UK earlier this year.

It emerged at the time the share issue prospectus was published that former ScottishPower chief executive Philip Bowman paid £221,000 for 15,000 A shares in BrewDog which he bought from co-founder Martin Dickie.

If Equity for Punks is fully subscribed, Mr Watt will retain 37.1% of the company and Mr Dickie 32.5%.

The previous Equity for Punks programme took place in 2011 and raised £2.2 million.

inShare4

Ubuntu plans crowdfunded 'Edge' Linux and Android smartphone

Campaign hopes to raise £21.5 million for a new device that will combine the convenience of a mobile with the power of a desktop.

Canonical, the software company behind the Ubuntu Linux open source operating system, has launched a crowd funding campaign to raise money for the development of its flagship smartphone, Ubuntu Edge, which it says will launch early next year.

Ubuntu founder Mark Shuttleworth describes the Ubuntu Edge as the "concept car of smart phones". It will bring together “mobile convenience with desktop power in a single device,” and aims to be a catalyst for mobile innovation as well as hardware and software development.

The Ubuntu Edge will run both the Ubuntu phone operating system, which launched in January 2013, and Google Android. Shuttleworth said that there is a very large enthusiastic community around Android, and providing a standard Android environment is a good way for them to experience the hardware.

However, it will also be a proofing ground for Ubuntu mobile OS, which Canonical is hoping will begin running on more mainstream devices in the near future.

Like Microsoft, Canonical is pushing the idea of desktop and mobile convergence. When plugged into a monitor, the device transforms into a PC with the full Ubuntu desktop and shared access to all the phone’s files.

Microsoft has certainly mapped out a similar vision, where they have common visual elements across the mobile and PC experience, but we thought it was possible to go even further and really converge the devices so that it’s the same operating system, not a similar operating system, and that’s really where we thing there’s a gap for this proofing ground," said Shuttleworth.

In order to run two operating systems in parallel, the device needs the power of a PC, Canonical claims, so Ubuntu Edge will be equipped with “the latest, fastest processor, at least 4GB of RAM and a massive 128GB of storage”. The company was not able to reveal exact specifications, but said it is working with “one of the leading design manufacturers in Asia” to develop the device.

The Ubuntu Edge will have a 4.5-inch 1,280 x 720 HD display with "pure sapphire crystal" touchscreen rather than glass, which is so tough it can only be scratched by diamond. It will have a 8MP rear and 2MP front camera, and will also pioneer the use of long-life silicon anode battery technology.

A special dual-LTE solution will allow high-speed roaming with access to 4G-LTE broadband in both Europe and the US, according to Canonical.

Canonical hopes to raise £21.5 million using crowd funding website Indiegogo. Anyone who pledges £394 on day one, or £592 thereafter, will receive their very own Ubuntu Edge device in May 2014, and there will also be an opportunity for people who back the project to participate in the final selection of some of the materials and software capabilities. Canonical is only manufacturing 40,000 Ubuntu Edge devices.

“To make the future of mobile happen we’ll have to smash every record in crowd funding history. But if there are enough enthusiasts who want the ultimate in performance, storage, screen, battery and bandwidth, Ubuntu Edge will be the catalyst for awesome innovation, and a taste of the future of the phone,” said Shuttleworth.

Margareta Pagano: Crowd power can carry us to recovery

Crowdfunding is one of the most thrilling developments in finance for at least a couple of hundred years – just check out how beer-lovers have poured their money into the Scottish craft brewery BrewDog. It is democratic, transparent, imaginative and inclusive as it lets the crowd – private investors – engage directly with start-up entrepreneurs and small firms looking for new sources of finance. It is also growing like topsy and going global.

There are now 600 crowdfunding platforms in the world and they have raised $5bn (£3.4bn) for new ventures. In the UK there are 40 or so crowd platforms that have provided about $1bn of new money for companies pitching either through debt, equity donations or reward-style incentives. The amounts being raised are still trivial compared with conventional bank finance – even now, after the crash, the UK's banks provide about £7bn a month to SMEs – but it has huge potential. Some suggest £15bn could be sourced from the UK crowd over the next few years as investors search for better returns for their cash.

By far the fastest growing are the peer-to-peer platforms, which offer investors a competitive interest rate in return for lending to either consumers or small business. Funding Circle, for example, has trebled the amount of money it has raised for small businesses in every year since its launch three years ago. In terms of risks for the investor, the P2P lenders are simple creatures and welcome being regulated by the Financial Conduct Authority (FCA) next year.

By contrast, investing in companies pitching on the crowdequity platforms is going to be longer-term and riskier. Even so, investors are proving keen and Crowdcube has now raised £10m for 56 companies that have pitched on its site. Others like Seedrs, Abundance Generation and Investing Zone, backed by the venture capitalist Jon Moulton, are also seeing a big rise in traffic from investors – and companies – on a daily basis.

Yet they share a common fear – that the regulators are in danger of taking the crowd out of crowdfunding. Indeed, Moulton is concerned that the FCA is going to strangle the industry at birth because it's being too heavy-handed and putting people off taking risks. In typical Moulton style, he told me: "You can stop all cancers if you kill all babies at birth." Quite. But his point is sound. At the moment, the FCA wants all sites to tell investors that they must prove they are high net worth and sophisticated if they are to register with them. To demonstrate this, investors have to fill in questionnaires to show they have the money – but everyone knows the answers can be made up.

Crowdcube and Seedrs also have to tell investors to have a diversified portfolio and invest a minimum of £1,000 across no fewer than 10 businesses in their first year of membership. How crazy is that? It's also unenforceable. Understandably, the FCA wants to protect consumers, but this sort of guidance is patronising to the public. Any potential investor looking at the companies pitching on these sites knows they are high-risk start-ups. Yet anyone is allowed to invest on the highly regulated stock market, so imagine you had invested your life savings in Royal Bank of Scotland in 2007 ... You can go into a betting shop and put large amounts of money on a horse, and no one is bothered.

Hopefully, the FCA's boss, Martin Wheatley, will make sure that when the watchdog publishes its consultation paper this autumn, it takes a proportionate approach. If carefully nurtured, crowdfunding has the power to shift the balance away from the big financial institutions that wrecked the economy, and give it back to the small business owners and the small investor to help kickstart growth. Even the Commission on Banking Standards said access should not be restricted to the "high net worth" individual. Let's hope the FCA chooses to walk with all angels and not just the rich few.

Yet they share a common fear – that the regulators are in danger of taking the crowd out of crowdfunding. Indeed, Moulton is concerned that the FCA is going to strangle the industry at birth because it's being too heavy-handed and putting people off taking risks. In typical Moulton style, he told me: "You can stop all cancers if you kill all babies at birth." Quite. But his point is sound. At the moment, the FCA wants all sites to tell investors that they must prove they are high net worth and sophisticated if they are to register with them. To demonstrate this, investors have to fill in questionnaires to show they have the money – but everyone knows the answers can be made uCrowdcube and Seedrs also have to tell investors to have a diversified portfolio and invest a minimum of £1,000 across no fewer than 10 businesses in their first year of membership. How crazy is that? It's also unenforceable. Understandably, the FCA wants to protect consumers, but this sort of guidance is patronising to the public. Any potential investor looking at the companies pitching on these sites knows they are high-risk start-ups. Yet anyone is allowed to invest on the highly regulated stock market, so imagine you had invested your life savings in Royal Bank of Scotland in 2007 ... You can go into a betting shop and put large amounts of money on a horse, and no one is bothered.Hopefully, the FCA's boss, Martin Wheatley, will make sure that when the watchdog publishes its consultation paper this autumn, it takes a proportionate approach. If carefully nurtured, crowdfunding has the power to shift the balance away from the big financial institutions that wrecked the economy, and give it back to the small business owners and the small investor to help kickstart growth. Even the Commission on Banking Standards said access should not be restricted to the "high net worth" individual. Let's hope the FCA chooses to walk with all angels and not just the rich few.