Fund of Crowdfunded Offerings Allows Participation in Ten Companies with a Single Investment. Expectations are this is the First of Many to Come.
Leading equity crowdfunding platform Seedrs, has launched the fast-emerging industry’s first-ever ‘fund’ by offering UK investors the chance to take a stake in 10 companies with a single investment. From first-time investors to established angels, everyone will be able to back a carefully selected group of entrepreneurs all aiming to build the next internet giant – diversifying the inherent risks of backing early stage, web start-ups in the process.
The ten start-ups will be participants in a soon-to-launch ‘incubator’ for internet-based tech companies, WebStart Bristol. The incubator will give the startups ten weeks of intensive mentoring in areas such as product development, finance and marketing as well as free IT and office facilities to ensure the businesses can make the best use of the Seedrs backing to grow their businesses.
Investors through Seedrs will be invited to invest a combined £150,000 in exchange for 10% of the equity in each of the ten new companies going through the WebStart Bristol scheme, which begins in January 2014. Once the fund is closed and the start-ups are selected to the programme, Seedrs will begin the legal due diligence and draft the subscription agreements before transferring the investment to the startups in exchange for shares. Seedrs guarantees regular company updates and on-going engagement so investors know how their investments are doing and how they can be involved.
Jeff Lynn, chief executive of Seedrs, said: “We set out to be a new kind of financial services firm that makes investing in startups simple and rewarding. Setting up this fund complements that by making it much easier for people to diversify their investments and show their support for the thriving tech ecosystem that has emerged in Bristol over the last several years”.
“Bristol benefits from close proximity to London, a rich manufacturing heritage, thriving universities and fantastically vibrant culture, and young people are expressing an interest in staying instead of moving away to Tech City. The WebStart Bristol fund is looking to mould and mentor young tech companies – with the support of their investors – and make them stand out among the tech world’s finest.”
Unlike backers of traditional incubator and accelerator schemes, investors in the WebStart Bristol fund will be able to access generous tax reliefs through the Government’s Seed Enterprise Investment Scheme (SEIS), which means – in some circumstances – they may be able to claim all of their investment back through from HMRC.
Mr Lynn said WebStart is likely to be the first of a number of funds run by the crowdfunding site.
Mike Jackson, founder of WebStart Bristol, said: “We are creating a space for bright young things who want to become the next Mark Zuckerberg and we’ll show that you don’t have to go to Silicon Roundabout to do that.”
Incubators are often the best way to start investing in startups – and going through Seedrs means that backers will be able to access generous tax reliefs whether the companies succeed or fail.
“Investing in any startup is a bit of a lottery – only a few succeed but out of ten the odds are that at least one will be successful, and with the high multiples in the internet sector, you might only need one,” he said.
The programme is accepting applications now on the WebStart Bristol site now.
Mr Jackson added: “Most people wouldn’t have spotted any of the current super successful app and web service companies so we will be judging the entrepreneurs, not the idea. If they have the drive, skills and judgement to see it through, we’ll go for it.”
Mr Jackson said he aims to repeat the process twice more next year after the first Seedrs WebStart fund. The funding round for WebStart opened today and can be accessed at Seedrs now.
WebStart Bristol is the brainchild of Bristol based entrepreneur Mike Jackson. Inspired by a Wired article about the original Silicon Valley Internet Incubator, Y-Combinator, he decided an incubator was the safest route for investing in start-ups. Jackson intends on investing £30,000 of his own money in the inaugural fund.