Seedrs

Seedrs
Web address www.seedrs.com
Commercial? Yes
Type of site
Investing online
Available in English
Launched 6 July 2012

Seedrs is an equity crowdfunding platform for investing in startups and later-stage businesses throughout Europe. Seedrs allows users to invest as little as £10 or €10 into the businesses they choose and lets early-stage startups and more established businesses raise investment from friends, family, customers, angels and other independent investors in exchange for equity in the business. The platform offers three types of campaigns for investment - equity, funds and convertible campaigns.

Seedrs is an "all or nothing" platform where companies do not receive any funding unless they reach their declared investment target, but businesses have the chance to accept more than originally asked for in a process called "overfunding".

Seedrs allows a wider base of potential investors, among the mass affluent, access to startup investing - an asset class that was previously only available to high-net-worth or sophisticated angel investors.

Seedrs was the first equity crowdfunding platform to receive regulatory approval from a financial regulator – the Financial Conduct Authority (FCA, formerly the FSA) in May 2012.[1] The company is based in East London’s Tech City,[2] with its design & development team operating from Lisbon, Portugal.

History

Seedrs was founded by Jeff Lynn (CEO) and Carlos Silva (COO) as part of an MBA project at Oxford’s Said Business School and officially launched in the UK on 6 July 2012. Seedrs raised £1.3 million in funding in May 2012 from backers, including: DFJ Esprit, AngelLabs, Digital Prophets and several angel investors. In December 2013, Seedrs raised the largest equity crowdfunding round ever, raising just over £2.5 million from 909 investors.[3]

Seedrs's Board of Advisors includes: James Alexander (Zopa and The Foundation), Mike Butcher (TechCrunch and London Web Summit), Ralph, Lord Lucas (House of Lords), Dale Murray (Angel Investor of the Year and successful entrepreneur) and Todd Ruppert, former CEO of T. Rowe Price Global Investment Services.

Seedrs was named one of "East London's 20 Hottest Startups" by The Guardian; in July 2012,[2] was Wired's "Startup of the Week" in August 2012,[4] and was named by Silicon Valley Comes to the UK as one of the top 100 UK Businesses in November 2013.[5]

Noteworthy events

Seed Enterprise Investment Scheme (SEIS)

On 6 April 2012, the Seed Enterprise Investment Scheme (SEIS) was launched by the UK Government, with the goal to "stimulate entrepreneurship and kick start the economy."[15] The scheme offers up to 50% individual income tax relief, up to 28% capital gains tax relief and capital gains tax re-investment relief to investors who invest in eligible startup companies. Seedrs has a high concentration of SEIS eligible startups listed for investment and makes it very simple for UK tax payers to take advantage of the reliefs online.[16]

Funded Campaigns

On average, £1.6 million per month is invested into an average of 10 businesses per month. Some of the recently funded companies include:

Business Name Total GBP Equity Sector Location About
Chapel Down £3.95M 14.11% Wine and craft brewer ENGLAND Chapel Down is an award-winning English wine producer and craft beer brewer, based in Tenterden, Kent. The business is publicly listed on ISDX and became the first listed company to ever raise equity crowdfunding.
PixelPin £150,000 10% Digital tech ENGLAND PixelPin is the first Seedrs startup to raise £150,000. PixelPin eliminates the traditional alphanumeric password by using a picture based approach, whereby users choose an image that’s personal to them. Then they choose 4 pass-points in sequence. The PixelPin process eliminates the risk of phishing, dictionary attacks and brute force hacking.
NearDesk £1M 22.56% Tech ENGLAND NearDesk is the "Oystercard for desks" making it simple to tap in and out of desk space, so users only pay for the time they use.[17]
Trillion Fund £610,550 11.95% Equity ENGLAND Trillion is a crowdfunding platform that raises money for environmental and social projects.
Maily £352,270 26.05% App BELGIUM Seedcamp-backed safe, creative and fun email app for kids. Also backed through Seedrs by Faber Ventures.[18]

Shareholding structure

All investors receive voting shares in the companies they invest in through the platform. This guarantees that every investor receives on-going engagement and communication from entrepreneurs while protecting investor rights as nominee under a subscription agreement. The structure endures that investors have a say while their rights are protected, and that entrepreneurs do not have the administrative burden of looking after numerous individual investors. Ultimately, it means that businesses and their investors share success down the line.

Investors

Seedrs investors do not need to worry about managing their investments directly. Unlike other crowdfunding platforms, on Seedrs all investors receive voting shares and investments are protected using both the statutory provisions afforded to ordinary shareholders as well as contractual protections that are in place under their subscription agreements with the funded companies. The subscription agreement has such protections as: consent rights, pre-emption rights and tag-along rights. And uniquely, as the nominee for the investment, Seedrs works to ensure that even small £10 investors receive the same rights as larger institutional investors, such as Passion Capital, MMC Ventures, Ballpark Ventures, Seedcamp, Faber Ventures, and others who've invested through the platform.

Entrepreneurs

The nominee structure protects companies from the risks that come with having a large number of investors. By pooling investors under the nominee structure, companies deal with one shareholder rather than a large number of individual shareholders that can arise from equity crowdfunding. Seedrs votes and issue consents on behalf of each Seedrs investor. In the absence of such an approach, the difficulty in obtaining consents and other signatures from each individual investor could make it nearly impossible to raise further finance.

The case of German startup Smarchive is a good example of how a nominee structure and subscription agreement can be beneficial for startups. They had difficulty raising VC funding in 2012 after having previously raised finance from equity crowdfunding platform Seedmatch from 140 investors.[19]

Fees

Seedrs takes a one-off fee of up to 7.5% from successfully funded businesses which covers all legal and administrative costs from raising funds.

Seedrs also takes a success fee from investors of 7.5% of the profits investors make as a result of their investment, covering day-to-day management of shares and on-going investor protections.

See also

References

  1. Business, Editor (18 August 2012). "FSA warning over crowdfunding sites". The Independent. Retrieved 20 August 2012.
  2. 2.0 2.1 Silver, James (8 July 2012). "East London's 20 hottest tech startups". The Guardian. Retrieved 11 August 2012.
  3. PEREIRA, JOÃO PEDRO (17 December 2013). "Seedrs manages 2.5 million in its own investment platform". Publico. Retrieved 9 December 2013.
  4. "Startup of the Week - Seedrs". Wired UK. Conde Nast. Retrieved 15 August 2012.
  5. Goldburn, James. "SVC2UK unveil this year's 100 Club members". TechCityNews. Retrieved 8 December 2013.
  6. "Seedrs Becomes First Online Investment Platform to Join UKBAA". UKBAA News. UKBAA. Retrieved 12 December 2012.
  7. O'hear, Steve (7 October 2013). "Seedrs Lets Armchair Investors Take A Punt On WebStart Bristol’s First Incubator Cohort". TechCrunch. Retrieved 7 October 2013.
  8. "Crowdfunding start-up Seedrs raises £750,000 through its own website". The Telegraph. 25 November 2013.
  9. "Seedrs to tap investors across EU". Financial Times. 25 November 2013.
  10. Beaumont-Thomas, Ben (3 December 2013). "Happy Days musical crowdfunds £250,000 for national tour". The Guardian. Retrieved 17 December 2013.
  11. Prosser, David (8 May 2014). "Maily: The Model for Start-Up Funding In Europe Today". Forbes. Retrieved 10 June 2014.
  12. O'Hear, Steve (6 July 2014). "Crowdfunding Platform Seedrs Begins Offering ‘Convertible’ Equity Option". TechCrunch. Retrieved 8 July 2014.
  13. Sharman, Andy (8 September 2014). "Chapel Down launches crowdfunding push". FT. Retrieved 12 September 2014.
  14. Wilhelm, Alex October 30 2014 Techcrunch. "Equity Crowdfunding Service Seedrs Acquires Junction Investments, Plots US Expansion"
  15. "Seed Enterprise Investment Scheme". SEIS Information. Retrieved 15 July 2012.
  16. "SEIS". Seedrs Site. Retrieved 2 November 2012.
  17. Butcher, Mike. "NearDesk Raises £1M On Crowd Equity Platform Seedrs". Techcrunch. Retrieved 10 July 2014.
  18. Prosser, David (5 May 2014). "Maily: The Model for Start-Up Funding In Europe Today". Forbes. Retrieved 9 July 2014.
  19. Unknown. "How crowdfunding nearly bankrupted my company". Whiteboard Mag. Whiteboard. Retrieved 3 March 2013.

External links