Exeter-based Crowdcube has launched a new secondary product to later-stage businesses a way of offering early investors a return on their investment while giving new investors a chance to buy a stake.

The firm said its Direct Community Offer (DCO) has been built to solve liquidity problems for early investors, which has been “exacerbated by businesses staying private for longer, and represents an exciting next step in the evolution of investment crowdfunding,” according to the firm.

The product will be open to European later-stage businesses looking for alternative ways to create liquidity.

It addresses a key trend of companies, like Slack and Spotify, moving away from what it called “buzzy IPO listings” to direct listings.

It said the DCO connects three sets of stakeholders: entrepreneurs who wish to offer their communities a stake in their business, new investors via Crowdcube’s investor platform, and the current shareholders in the business who want to take up the opportunity to sell shares.

Darren Westlake, CEO and Co-founder Crowdcube said: “We’re seeing a global trend towards high growth, household names, looking for alternative ways of rewarding early investors with some liquidity, without the burden of going public through a traditional IPO.

“These same forward-thinking businesses also love the idea of offering their loyal customers the chance to become new shareholders, without the need to raise further investment. The DCO solves this conundrum.”

Since lockdown, Freetrade, Moneybox and what3words have all raised over £7 million from over 35,000 investors  on the platform which has previously been used by the likes of unicorns Monzo, Revolut and BrewDog, Curve, JustPark, carwow and Mr. and Mrs. Smith.