First Time Public Funds Have Been Used to Support UK Business in this Manner. Council Looks to Boost Economic Growth.
A United Kingdom county council is investing in a small business through equity crowdfunding site Seedrs in a pilot project designed to support local entrepreneurs. Lancashire County Council is investing in local startup ‘Haystack’ using one of the world’s leading equity crowdfunding platforms. The County Council’s move to support a local business through Seedrs marks a significant step in the coming of age of crowdfunding, as this is the first time public funds have been used to support businesses in this way.
CEO and Co-Founder of Seedrs, Jeff Lynn, said, “To be the first ever equity crowdfunding platform to have received an investment of public funds through a branch of Government is a big vote of confidence for both equity crowdfunding as a concept and Seedrs as a leading platform.
The startup receiving this investment is ‘Haystack’, a revolutionary new search tool which will enable people to discover and follow new music and artists. It is the brainchild of Lancaster-based entrepreneurs Ryan Edmonson and Josh Dring, who are seeking £29,000 in total in return for a 12% share of the company. In addition to an investment of £3,000 from Lancashire County Council, other investors through Seedrs have already invested almost 25% of the business’s target. The campaign has 39 days to run.
“We hope that Lancashire will be the first of many county councils and other government departments that will embrace this very direct and transparent way to support British startup businesses that can make such a key contribution to economic growth.” County Councillor Jennifer Mein, leader of Lancashire County Council, said: “This is a forward-thinking way to bring new finance into business by unlocking some of the real or perceived blocks to accessing appropriate growth funds.
Mein continued, “We were the first council in the country to invest in crowd-source funding and we’re pleased that we’ve agreed yet another way for companies to access funding to support their growth ambitions and unlock the potential in the county’s economy. Peer-to-peer lending is a fast-growing form of business finance and we hope our partnership with Seedrs will inspire other councils to look for new ways to fund businesses in their area.”
Seedrs is authorised and regulated by the Financial Conduct Authority (formerly the Financial Services Authority). The platform is presently only available to residents of the United Kingdom but management indicated earlier this year they intend on expanding into other markets in the near future. Seedrs has experienced a 600% growth rate during 2013.