Founded in 2010, Urbanara is an upscale ‘home wares’ site across Europe, but manly Germany. It has VC backing, 25,000 customers and will make about €5million in sales this year. It controls its entire supply chain and only sells its own label products. So not exactly a vast business but solid enough. It wanted to raise more money. But instead of going for the tired route of more venture financing, it’s doing something slightly odd – it’s going to do a ‘crowd-sourced’ IPO’ via a German-only platform called Bergfüerst.
Urbanara aims to raise at least €3 million this way, in an “IPO” which will function in the same way as a normal IPO, except it’s done via a crowd-funded platform. For two weeks in September interested potential investors will be able to subscribe for Urbanara shares via the Bergfüerst platform. The issue volume and subscription range will be announced in early September and trading will start in late September. Investors will be able to bid within the announced share price range and those bids will determine the exact share price. The starting investment will be €250. In addition to an equity stake, crowd investors will also be given additional benefits and services from Urbanara.
Benjamin Esser, co-founder and CEO of Urbanara says the IPO fits with the brand’s values of “transparency”. So to some extent this doubles as a marketing gimmick I guess. But he also thinks this type of funding is “the ideal complement to classic venture capital”.
Urbanara will be the first company to IPO on Bergfüerst’s platform. Bergfüerst differs from other platforms in that it targets businesses that are no longer in the early startup phase but rather have demonstrated a viable business model. So this is a little like a growth financing round.
Bergfüerst is also the only platform that has been accredited by the German Financial Authority (BaFin). Shares can be traded online on the Bergfüerst platform by investors and the regulations for this type of offering are identical to a classic IPO, such as providing a prospectus.The provision of this financial information means it differs from conventional crowd funding platforms and – they claim – gives the individual the same advantage as any venture capital fund.
Why are they doing this? Well, Urbanara says it’s to “turn its customers into share holders”, but also as an addition to traditional VC funding.
Urbanara has proven its profitability but is still too young for the German stock market, which requires a company to float for a minimum of €50 million. So floating on Bergfüerst is an interim stage in between the German stock market and the seed funding phase.
It will be interesting to see if this model takes off in Germany, which has traditionally had an aversion to so-called “risk capital” – as venture capital is known.