Crowdfunding Works is a series of interviews with the CEOs of major investment crowdfunding platforms globally. The intent is to learn from their experiences, data, and insight and use it to guide our understanding, and expectations, of the advent of security crowdfunding here in the United States. Fingers crossed, I hope our regulators take note: democratized private marktets working, companies being funded, jobs being created — and zero fraud.
I had the chance to sit down with the CEO of Seedrs, Jeff Lynn. Seedrs is an equity crowdfunding platform in the UK that allows investors to invest as little as £10 ($16) in startups they believe in. Pause for a second and ponder the implications of this. A truly democratized private marketplace that invites individuals of all geographies, and economies, to participate in the startup ecosystem. I’ve written before why this is such a magnificent thing.
One of the more notable features of the Seedrs model is how they structure the post-investment process. Undoubtedly drawing on his legal background, Jeff and his team architected a system that speaks to the oft voiced concern around “crowded cap tables.” Startups do not issue shares to individual investors. Rather, they elect Seedrs as a nominee of the investors, making them the sole legal shareholder in the transaction. Post-transaction, companies submit updates to Seedrs which then disseminates the information to investors, all via their platform. Investor relations becomes far more manageable — and follow-on financings/liquidity events become a non-issue.
Here’s a quantitative and qualitative of the interview, with additional contextual information provided.
- Seedrs was founded in 2009; the team spent 2 1/2 years navigating UK regulations, officially launching in July 2012
- Equity crowdfunding platform in the UK; initially targeting only pre-revenue, idea stage startups but has since expanded its platform to support post-revenue startups
- $524,000 crowdfunded for 9 startups since inception (more data here)
- Average raise: $58,000
- Average equity offered 13% (high: 35%; low:5%)
- Crowdfunded $80,000 for a startup in less than 15 hours
- Free to list — must be approved first (can re-apply)
- To date: approval rate: ~50%; fundraising success rate: 15-20%; fully-baked: 7.5%-10.0%
- Maximum campaign duration: 3 months
- Thus far, concentration in consumer internet and mobile application startups
- Democratized: all investors can participate, both accredited and non-accredited
- Can invest as little as $16 (£10)
- Invest in a structured vehicle managed by Seedrs on behalf of the investors
- Post-investment: provided access to a private investor forum where they receive updates from the company
- Seedrs’ Business Model
- Crowdfunding Revenue
- Zero application fee
- Success Fee: ~7% of funds raised
- Carry: 7% of cash-on-cash capital gains generated by the startup
- Partnership Program
- Currently does not white-label its platform
- Crowdfunding Revenue
- Additional Resources