Seedrs, a leading investment crowdfunding platform, announced this past summer the feature of allowing companies to raise capital by using convertible securities. In the VC and Angel world offering convertible securities allows a company to push back the date of applying a valuation on a young company. Giving a value to a company with little to no revenues is a bit of an art – sometimes referenced as “VC math”. Seedrs likens the process to “deferred equity”. CIO Thomas Davies did a segment on CNBC sharing the new feature this past July.
All of this has to do with providing a growing portfolio of tools to facilitate capital raising for SME’s. One area where Seedrs has been adamant is to produce documents in plain English and not all lawyered up with legalize. Recently the platform shared their term and true to form it is quite easy to ingest. The company states, “we believe that raising capital should be transparent and simple – including nuanced fundraising structures like convertible equity”.
Seedrs has advocated the use of their “Nominee” structure where investors hold shares in an SPV that then is the shareholder of record. The funding platform strongly believes that investors on the Seedrs platform should have the same shareholder rights as every other investor – including big VCs and Angel investors.
The updated Term sheet is embedded below.
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