Crowdfunding platform Crowdcube has launched a new product for later-stage companies to fundraise.
In Brief:
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The Direct Community Offer (DCO) allows later stage businesses to offer early investors a return while offering new investors a chance to buy shares.
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This provides a liquidity solution for early shareholders who can be replaced by new investors.
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DCO will be available to European later-stage businesses that wish to create liquidity.
What does this mean?
Now, many companies are staying private for longer, which exacerbates the liquidity problem for early-stage investors. This solution allows an alternative to an IPO for initial investors to see a return.
