Still looking for the perfect last-minute gift for your loved-ones this holiday season? You’re in luck! We’ve compiled a list of offers, last-minute gift ideas and shopping tips for the savviest of gift-givers, from some of the most indulgent and interesting Seedrs-funded businesses.
Equity crowdfunding is evolving quickly. Naturally, equity crowdfunding fills the funding gap that exists for many early-stage businesses that are too risky for banks, too early for angels and too small for venture capitalists. But now, later-stage companies are catching on to the power of professionally managed crowdfunding platforms (like Seedrs). What we are starting to realise is that equity crowdfunding works really well for certain types of business, regardless of what stage they are at.
This month, publicly-listed, award winning English winemaker and craft brewer Chapel Down (listed on ISDX) launched a £1.6M crowdfunding campaign on Seedrs. In less than three weeks, they overfunded to almost £4M, from around 1,400 investors – which makes this the largest equity crowdfunding campaign ever. This was the first time a public company – anywhere in the world – campaigned for investment via equity crowdfunding. This is an excitingly innovative approach to raising growth capital, especially when most companies at their stage, with their positive financial traction, traditionally reach out to institutions and large individual investors in The City. This is part of the continuing evolution in crowdfunding.
So, why does campaigning on Seedrs make so much sense for larger, listed companies?:
Companies need investment to grow
Regardless of stage, businesses often need capital investment for growth. Publicly listed companies are no different and look to raise money from institutions and retail investors alike. But when they do this the company is not actually raising money through the exchange. Instead, the brokers and placers are the distribution channels through which the institutional and retail investors are accessed. Seedrs, in the case of Chapel Down, is a new type of distribution channel through which Chapel Down as a publicly listed company can access retail investors who might not otherwise have been able to be reached.
Raising investment takes time
When raising investment traditionally through brokers, it can be immensely time consuming and inefficient. Roadshows, sales calls, meetings, emails – it can be draining on the resources of a company. Seedrs provides a very quick, efficient and online process for the publicly listed company to reach out to these investors, and for these investors to quickly and easily subscribe for publicly listed shares.
It’s more than just funding
Inviting customers to invest in your business is a great way to build long-term brand engagement and resonance among people who are already bought in on a transactional level. By inviting them the chance to invest and be a part of your future, you’re inviting them to have a deeper, longer-term relationship with your business. Because these customer-investors will be literally bought into the business, they’ll have a vested interest in helping with user research and feedback, buy your brand instead of competitors, becoming brand evangelists, and keeping in touch.
Combine online and offline investors
Quoted companies likely have previous investors who will have pre-emption rights and may want to follow on their investment. Or, they could have interest among outside institutions. Bringing these offline investors online (through a placing or new share offer), along with a crowd of customers and potential customers, is dramatically more efficient. All investors, regardless of size, can be offered the same transparent terms and same (ordinary) shares; shareholder documentation is standardised; and the ongoing relationship between the business and its investors is more effectively managed through a post-investment investor relations web portal.
Offer more than investment
Many UK businesses may qualify to offer advantageous tax reliefs to investors, including EIS, that wouldn’t be applicable for shares purchased on an exchange. Investors need to hold shares for a minimum period of time to qualify for the reliefs (three years in the case of EIS), but many investors find the tax reliefs highly appealing for longer-term investments and prefer to have access to investments that qualify. Crowdfunding through a platform also makes it possible to offer investors additional perks like free samples, invitations to AGMs, early-access to future products, tours and more. These additional rewards aren’t easy to manage on an exchange.
Business crowdfunding has evolved from raising equity for startups, to crowdfunded funds, to crowd equity convertibles and now crowdinvesting in publicly-listed companies. Our internal legal team and professional processes mean we can continue to offer new, exciting ways for people to invest in businesses of all stages, sizes and types.
The Guardian recently ran an interactive question and answer session about surviving your first year as an entrepreneur. The session was sponsored by Nominet who run the Nominet Internet Awards. The panel was facilitated by Matthew Caines the editor of the Guardian’s Culture Professionals Network. The session covered some fascinating topics like the difference between the corporate world and life in a startup. I’ve chosen a couple of the key conversations and insights to quote below. Check out the discussion page itself to see the rest of the comments and questions.
Why did you want to become an entrepreneur?
Joe Scarboro: Doing and creating something meaningful is the key, as well as being the master of your own destiny. I’d always had that feeling of wanting to do my own thing, at every job I’ve had I always felt that I’d be doing things a bit differently if I were in the driving seat!
Jeff Lynn: I wanted to create value, full stop. I didn’t want to look back on my life and feel that all I had done was push paper around for 40 years. I was determined to do something that had (or at least tried to have) a lasting impact. The specific idea only came later.
In March the FCA enacted a new set of equity crowdfunding rules. It may come as a surprise to some, but equity crowdfunding has been regulated in Britain since 2000, long before crowdfunding even existed as a concept.
The Financial Services and Markets Act requires firms that arrange transactions in investments, including shares, to be authorised by the appropriate regulator and adhere to a strict set of regulations. That was true regardless of whether those transactions were arranged online or offline, and it applied just as much to novel platforms as to old-fashioned investment firms.
When we were building Seedrs, we thought that rule was quite clear, and as a result we waited to launch until we had authorisation from the Financial Services Authority (now called the Financial Conduct Authority, or FCA).
New UK equity crowdfunding rules
Unfortunately for the industry, one platform ignored these rules and launched without authorisation, before eventually being compelled to seek approval. Shortly afterwards, the FCA decided that, in order to avoid a repeat of this type of behaviour, it would adopt rules specific to equity crowdfunding.
After a consultation process, the new equity crowdfunding rules were enacted in March 2014. Seedrs welcomes the new rules, as we believe they provide clarity to investors and platforms alike. Proportionate regulation helps markets thrive, and we believe the rules the FCA adopted strike an effective balance—and certainly one that is better than what many other countries are currently proposing.
Who is eligible to invest through crowdfunding?
As it happens, the new rules do not apply to Seedrs directly, as we have chosen from the beginning to be regulated as a” fund manager” rather than as a mere arranger. This is because, beyond simply introducing investors to startups, we act as their nominee, enforcing shareholder protections and helping to ensure that they earn returns from successful businesses—something that many other crowdfunding platforms don’t do. We’ve long advocated for the importance of a nominee structure.
Importantly, the exact same investors are eligible to invest through Seedrs as are eligible to invest through the platforms that come under the new rules.
In both cases, investment is open to any investor who can demonstrate that he or she has the experience and knowledge required to understand the investments being offered. Under the new crowdfunding rules, this is called an “appropriateness test”, whereas under the Seedrs structure it is called an “elective professional client categorisation”, but the standard of the test is the same.
One difference that does result from our regulatory categorisation is that investors who use Seedrs are not subject to the much-maligned “10% requirement”, which restricts investors to investing no more than 10% of their net assets in crowdfunding investments per year. That said, we encourage all investors to build diversified portfolios and only allocate what they believe to be a reasonable proportion of their capital to early-stage investments.
Regulation will continue to be an important part of the crowdfunding discussion, and as the industry grows, there will likely be further modifications of the rules. We look forward to engaging in this process: having been the first regulated equity crowdfunding platform in the world, we believe that complying with applicable law is essential. We are pleased that the clarity provided by the new rules will help to ensure that others do so as well.
This post was written by Joni Farthing, founder of Women Outside the Box, which is currently seeking capital through Seedrs.
You know when a person comes into a room and you instantly know you are right for each other? That wonderful feeling when the whole world looks fabulous! Something deeply instinctive just clicks and you know you are in the zone, the flow, the – well, one of those good places anyway.
Startup accelerators like Y Combinator (YC), TechStars and Wayra are increasingly releasing young, vibrant companies into the mainstream. Some say there are too many startups and not enough investors to support them.
But, in a recent essay aimed at startup investors, Y Combinator founder and successful startup investor, Paul Graham says there are plenty of reasons to be more optimistic about investing in startups.
Our CEO, Jeff Lynn, spoke with the Telegraph about why the UK is leading the way in crowdfunding.
He cites strong support from the Treasury, Government and Department for Business Innovation and Skills (BIS) as helping advance equity crowdfunding as a source of new business funding, and he praises the development of the Seed Enterprise Investment Scheme (SEIS) tax relief aimed at incentivising people for investing in new businesses.
None of the the startup campaigns on Seedrs include financial projections. This was a conscious choice by us when we built the platform, and I thought I’d take a moment to explain why we made that decision.
Financial projections are always speculative. Even for the most well-established companies, saying what will happen in the future involves a substantial amount of guesswork.
It’s relatively rare to get a lawyer excited. About anything. But, the introduction of the Seed Enterprise Investment Scheme (SEIS) in April was a big enough announcement to elicit wide-eyed disbelief and giggles of excitement from me. And yes, I am a lawyer.
SEIS is designed to help small, high-risk companies raise money by offering a range of generous tax reliefs to investors who purchase new shares in them. Seedrs will have a significant number of Seed EIS eligible companies – and any investment made in such companies through Seedrs will be eligible for relief (to the extent that the investors themselves are eligible). So, finding great, Seed EIS eligible companies in which to invest in will be simple.
It may seem like an odd choice to be launching an investment platform in Europe these days. Granted, for the moment Seedrs is limited to the UK, which is somewhat insulated from the most extreme distresses of the Eurozone. But the economy is in far from ideal condition even here, and and in any event we make no secret of our ambition to expand to the Continent as soon as we can. Are we crazy, or is there method in the madness?