Seedrs has shared their equity crowdfunding term sheet revealing some additional insight into how their platform operates. Investment structure and the understandings between entrepreneur and investor may be pretty dry stuff but it is exceptionally important. Having a well structured term sheet that protects both the business and those inclined to support it, is vital to a transparent and functional investment offering. Everyone needs to know up front what to expect and how things will work in the future. Seedrs is a bit unique in the fact they have chosen to offer investment crowdfunding where their platform acts as a nominee. Effectively Seedrs is the shareholder and they represent the interests of all investors in the crowdfunding company.
Seedrs notes that “more and more early stage investors are sharing their documentation” so the entire ecosystem may improve, grow and adapt. Seedrs wants “every company that raises funding on Seedrs to be set up with the best chances for success in the future”. Of course this means the listing company needs to be ready to raise follow on funding. All documentation for equity crowdfunding offerings on the Seedrs platform is handled via their back end system which helps streamline the process and make it easier for the company.
As they describe their “plain English” document:
The term sheet is a non-binding document and provides a quick summary of the investment structure and key terms in the main legal documents that are used in the fundraising process. Parts of the term sheet that you might notice include:
The focus on clean and simple ordinary shares for all investors (rather than muddled A and B class shares which may not have voting rights);
The provision of professional grade investor protections to even the smallest shareholders; and
The use of a nominee structure to align the interests of the company, the crowd and future investors.
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