Seedrs has secured more than 2 million pounds of investment via its own platform, setting a new world record for the most equity raised via an equity crowdfunding site. The London-based startup, which last week became the world’s first equity crowdfunding platform open to investors and entrepreneurs throughout Europe, had originally called for 750,000 pounds of investment in return for 12.66 per cent equity.
Seedrs has secured more than £2m of investment via its own platform, setting a new world record for the most equity raised via an equity crowdfunding site.
The London-based startup, which last week became the world’s first equity crowdfunding platform open to investors and entrepreneurs throughout Europe, had originally called for £750,000 of investment in return for 12.66 per cent equity.
Having met the target in a matter of hours, Seedrs – which provides a platform for ordinary people to provide early-stage investment for startups in return for an equity stake – extended the opportunity for investment to satisfy investor demand.
It has now secured over £2.1m – nearly three times the target amount – from over 850 investors, in return for just under a 30 per cent stake in the business.
The overwhelming response to the campaign saw Seedrs hit £750,000 by 10:30 am on the day the campaign opened, reach £1 million by that afternoon and secure £1.5m in just two-and-a-half days, shattering all existing records.
Jeff Lynn, chief executive and co-founder of Seedrs, said: “We were completely overwhelmed by the support our campaign received. We see this as a tremendous validation of equity crowdfunding, our model and our business, and we want to thank everyone who has invested for joining us on our journey.
“For most entrepreneurs, raising £2m is a long, painful process. Using our own platform we’ve shown how startups can harness their customers’ enthusiasm to raise money quickly and efficiently.”
The Seedrs fundraising campaign included everyone from ordinary investors investing from as little as £10 to business angels investing up to £125,000. Together, these investors saw the potential for equity crowdfunding to disrupt traditional financial services and leapt at the chance to buy a stake in one of the leading players in an industry that experts predict could be worth $300bn (£185bn, €220bn) in time.
Of the decision to accept more capital than initially targeted, Mr Lynn said: “Given the incredible level of interest our campaign has seen, we decided to keep it open for further funding at the same valuation. The significant additional capital we have secured will help us grow more quickly, and just as importantly, we want to get as many investors as we can – there are no better marketers than people with a vested interest in our success.”
Mr Lynn added: “This exciting new form of finance which allows new businesses to raise money from ordinary investors is here to stay and Seedrs securing £2m using our own platform is a vote for equity crowdfunding done properly, with protections for investors and a straightforward process for companies.”
Last week, Seedrs became the world’s equity crowdfunding platform open to entrepreneurs and investors throughout Europe.
Seedrs already has more than 27,000 registered members on its books, who can back businesses with as little as £10, and it has now funded £4.5 million across 51 deals in the 17 months since it launched. While Seedrs was only available to UK residents before its expansion into Europe, the company has been growing at an annualised rate of more than 600 per cent.
It was also the first equity crowdfunding platform in the world to receive regulatory approval from a financial regulator, the UK’s Financial Services Authority (the predecessor to the current Financial Conduct Authority).
Seedrs was recently named in the Silicon Valley Comes to the UK’s “100 Club” of businesses with the potential to generate £100 million in annual revenues in three to five years’ time. This followed on Seedrs’s inclusion in the FinTech 50 Watchlist in March and the Accelerate 250 group of Britain’s fastest-growing businesses in June, as well as coming shortly after its launch of the industry’s first ever crowdfunding “fund” in October 2013.
Notes for Editors:
Unlike rival crowdfunding platforms, Seedrs uses a nominee structure, meaning that it remains the representative of the investor throughout the investment and enters into a subscription agreement with each investee company. A subscription agreement is always used by venture capitalists and angel investors when they make investments, as it provides vital post-investment protection for investors and radically simpler administration for entrepreneurs, especially when seeking further funding. Seedrs firmly believes that investors and entrepreneurs who use its platform deserve the same level of protection and simplicity.
In the case of Seedrs’s own campaign, Seedrs wants to ensure that investors have just as much protection as they would in any other investment, while at the same time taking care that the structure does not preclude the company from raising further funds in the future. It is therefore using the same type of nominee structure as it uses for all its deals, meaning that it will act as nominee over its own shares. To avoid the conflict of interest that this could create, however, Seedrs will set up a dedicated, independent non-executive committee, elected by the investors, to vote and take all other actions in connection with the Seedrs shares.
Seedrs is a fully regulated online platform for discovering and investing in startups. It is one of the leading, most trusted equity crowdfunding platforms in the world.
Seedrs provides a straightforward, transparent process for entrepreneurs to raise seed capital for their businesses from friends, family and independent investors, and for individuals to invest in the shares of startups they choose from those listed on the site.
Unlike other equity crowdfunding platforms, Seedrs enters into a subscription agreement with every investee company, and it holds and administers the shares of that company as nominee for the underlying investors. This structure provides critical protections both for the investors and for the startups:
• Every investor receives voting shares so they can stay connected to the growth and direction of businesses.
Seedrs guarantees regular company updates and on-going engagement so investors know how their investments are doing and how they can be involved.
Seedrs protects investor rights as nominee under a professional subscription agreement. The subscription agreement provides essential rights, including ones to prevent investors from being unfairly diluted, to ensure that they will be able to sell their shares in a change-of-control transaction, and to require that the company provides them with ongoing information and the forms needed to claim tax reliefs. Any venture capitalist or angel investor who invests in a private company requires ta subscription agreement (sometimes called a “shareholders agreement”) like this, but most equity crowdfunding platforms do not do so and therefore leave investors unprotected.
For startups, the nominee structure ensures that the company only needs to deal with one legal shareholder for administrative purposes. This is essential when raising follow-on funding: many later-stage investors will not invest in a startup that has hundreds of individual shareholders, but with one nominee acting on their behalf as the sole shareholder, raising additional investment is straightforward.
Most equity crowdfunding platforms do not provide a nominee structure, meaning that the companies they fund may struggle to raise additional capital.
Seedrs’s fees are simple, clear and fair. There are only two charges. The first is a fee of 7.5per cent of any amount that is actually raised by the entrepreneur through the platform, which is paid by deducting this fee from the amount raised before the balance is transferred to the company. There is no ‘pay to pitch’, and if the startup doesn’t succeed in raising the money it is looking for, then everyone walks away and no fees are paid by anyone.
The second charge is a 7.5per cent fee levied on any returns that investors receive beyond their original investment, whether through the proceeds of a sale, dividends or other payments from the startup to the investors. Any returns paid to the investor up to the amount of his or her original investment are free of any charge.
Whether entrepreneur or investor, anyone can learn more about and sign up to Seedrs by visiting www.seedrs.com. Entrepreneurs and investors must be at least 18 years of age and based in the EU/EEA/CH.
Seedrs Limited is authorised and regulated by the Financial Conduct Authority (formerly the Financial Services Authority).
Direct: +44(0)20 7033 8901