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6 October 2016
Do you want to learn more about equity crowdfunding and online investing opportunities? Worldcore had the pleasure of talking to Tom Davies, Chief Investment Officer of Seedrs, one of the largest fundraising platforms in Europe connecting entrepreneurs with investors. Mr.Davies is responsible for the on boarding of businesses who are looking to raise money all the way through to closing their round, preparing and executing the legal documentation and then monitoring each successfully funded company to make sure that the investors are being protected.
What are the main advantages and strong points of your crowdfunding platform? Why are you better than your competition?
Since the very start we have built Seedrs to be a sustainable business which will allow the companies who use us to raise money to have the best chance of success and the investors who invest in them the best chance of making a profit on their investment. We deliver on this philosophy by approaching crowdfunding using a “lifecycle” model where we represent and support the investors all the way through to an exit of the company. Other platforms tend to use a “transactional” model which means that once the fundraising is complete, the platform disappears from the picture and the investors and companies are left on their own.
Seedrs is now operating across Europe and overseas. Does that mean that US citizens can invest in European startups and vice versa?
European businesses can raise money on Seedrs, and European investors can invest in any business that is live on the site. We will shortly be opening up Seedrs to “accredited” investors in the US (the US equivalent of the UK high net worth and sophisticated investors), allowing them to invest in the European businesses on our platform. We will then make a decision as to whether we also open up for US companies to use us, but that wont happen straight away.
How do the American and European crowdfunding markets differ? Are there any region-specific investment or marketing trends?
There are huge differences which all revolve around the legislative landscape. The UK and Europe is a long way ahead of the US, and a platform such as Seedrs (which has been operating since 2012) is still not permitted to operate in the US at the moment. Europe has a very advantageous headstart on the US in this space, and Seedrs is taking full advantage of this.
How to get started as an investor on your site? Can my Granny from another country become an investor?
Yes, provided that your Granny is resident in a jurisdiction in Europe that we support, and can pass our investment quiz. This quiz is designed to ensure that she understands the risks of investing in this high risk, but high reward asset class, and is really there to protect her.
How to choose right organizations to invest in? Do you know any secrets allowing potential investors to determine which start-ups will be most likely to succeed?
I am afraid we can’t really comment on that! We are not allowed to advise on what to invest in, but what we can say is that you should always do your research and read as much information about the company as possible. We provide a lot of resources on our site which will help you approach investing in a way that is both sensible and hopefully profitable for you one day.
Do you have a set minimum and maximum amount that people can invest?
The minimum is £10 and there is no maximum.
How much does it cost on average to run an equity crowdfunding campaign on your website?
Investors do not pay any fees to invest, and will only pay us a fee in the future if they make a profit. If you don’t make a return, you don’t pay any fees. Companies are charged a percentage of the funds that they raise, on a sliding scale basis – 6% on the first £150,000, 4% on amounts between £150,000 and £500,000 and 2% on anything over £500,000. We believe these fees are very competitive for both investors and companies.
What types of businesses are best-suited for equity crowdfunding? Do you have an “ideal start-up” model that will certainly gauge interest?
There is no ideal company that is suitable for crowdfunding. We have helped B2B, B2C, consumer brands and back end data solutions raise funds so we are pretty sector and type agnostic! However consumer-facing companies tend to do very well because they have a large audience of customers who they can invite to become investors in the business that they love as a customer.
What crowdfunding campaign was the most successful on your website? What is the secret of that success?
One of our largest successes was Chapel Down Wine. This English wine maker raised nearly £4 million on Seedrs from over 1400 people, most of who were loyal customers of the business. The company has more than doubled in value since then, and the company has seen a massive increase in sales in London, which they believe, is a direct result of the exposure that their Seedrs crowdfunding raise brought the company.
You ran your own crowdfunding campaign to launch in the U.S. market. Was it difficult for you to shift the focus and become a company seeking for investments? Were you sure in your success?
We are very lucky to own and run a platform that helps growth companies raise funds. So we used our own product and it was hugely successful. For us it was very humbling to have so many of our customers invest in us, which we believe truly validates our business model.
What are the main trends shaping the equity crowdfunding industry now? What kind of changes do you see coming within the next 5 years?
More and more later stage businesses are starting to use crowdfunding and we have even done an IPO through the Seedrs platform. We believe that equity crowdfunding will become the default way for companies to raise funds, regardless of their size, and as these companies get older there will be plenty of exit opportunities, hopefully bringing great returns to our investors.
Exciting articles several times a month