We are announcing today a significant expansion of our referral fee arrangements, as well as a new, more nuanced approach to our fee structure.
Word-of-mouth is one of the most effective ways through which new investors learn about Seedrs, and we want to incentivise people to spread the word as much as we can.
We are therefore significantly expanding our referral fee programme as follows:
- If you introduce an investor to Seedrs, we will pay you a referral fee equal to 50% of the company fees we earn from that investor’s investments over the next two years. This means that on most investments you will receive 3.75% of the amount invested by the person you referred. While this is a bit less than the 5% we offered under our old system, it now covers two years of investments rather than one —meaning that you will earn more from referring a regular investor than you would have in the past.
- We will deposit your referral fees into your Seedrs account as you earn them, and you can choose to withdraw them or invest them at any time. Unlike our previous system, in which promotional funds could only be invested and not withdrawn, you now have the choice to take your referral fees in cash. So go out and buy that new Tesla.
- You can also choose to pay it forward by having referral fees paid into the account of the investor you referred instead of to your account.
When we launched Seedrs just over two years ago, we were keen to adopt as clear and simple of a fee structure as possible.
Too many financial services firms annoy their customers with complex or hidden charges, and we were—and are—determined to avoid that. We do not believe in hidden legal fees, payment charges, administrative levies or whatever else our competitors may choose to sneak in.
Instead, we set our straight 7.5% company fee (commission) and 7.5% investor fee (carry) because we felt that, in addition to representing outstanding value for the work we do (see our Company Fees and Investor Fees for an overview of everything that is covered by our fees), they are transparent and easily understood charges.
The Need for Flexibility
We have no desire to move away from that clarity and transparency. At the same time, we have come to appreciate as we have grown that one size does not necessarily fit all, and that an effective fee structure needs to be a flexible one.
This has been especially true as we have started funding larger transactions: while a 7.5% company fee is excellent value for relatively smaller deals, we appreciate that it may not be the right price for rounds above £/€ 500,000.
We’ve also taken on board feedback from businesses that they see funds coming from their direct connections as different from funds coming from investors who learn about their campaign through marketing efforts or by browsing the platform. We are still creating a huge amount of value with respect to the former—by providing a simple and efficient way to aggregate all of those investments—but perhaps not quite as much value as we do for the latter.
On the investor side, we recognise that some large investors want to use Seedrs but hold and manage their shares directly rather than through our nominee structure. The Seedrs nominee structure is designed to offer a full suite of investor protections to those investors who do not have the time, money or inclination to negotiate and enter into contracts with each company on their own. But it doesn’t mean that large angel investors cannot use us as well, and we want to offer a fee structure that works for them. You can read more about holding shares directly in our recent blog post.
A More Nuanced Approach
All of this has led us to adopt a slightly revised fee structure.
Our standard 7.5% company fee can now be reduced in three situations:
- If a business is planning to raise more than £/€ 500,000, we are willing to discuss either reducing the 7.5% or capping the total fee amount.
- If a business brings a pre-identified investor who invests £25,000 or more and holds his or her shares directly, we will charge no fee on that investment.
- When a business brings any other investor who is not already a Seedrs member, we will reduce the fee we charge on that investment by 50%.
Meanwhile, we will charge investors no fee where they hold their shares directly rather than through our nominee structure.
We feel this fee this approach maintains our commitment to clarity and transparency while at the same time incorporating flexibility and tying our fees more closely to the value we create.