Recently, Seedrs, which calls itself “the UK’s No. 1 equity crowdfunding platform,” announced it has had more than £100 million invested on its platform in early-stage and growth-focused businesses since it launched in July 2012. Speaking about the portal’s creation, Jeff stated:
“The Seedrs team has always seen equity crowdfunding as a proper form of investment rather than just a bit of fun. In the early days of this sector, people perceived crowdfunding to be synonymous with Kickstarter and didn’t take the sector seriously or see its potential as an asset class. At Seedrs, we made a decision to go through a long process in order to do it properly. We wanted to design a model that was aligned with regulation, get approved by the FCA and brand Seedrs as a proper investment platform. Being highly professional from day one, treating investors the right way, building a robust and sustainable product before even contemplating marketing that product—I believe these have all been key to our success.
“Once we went live, we made a decision to start small and grow organically. This meant small deals being pitched by entrepreneurs to investors capped at a £150,000 raise. We were very conscious that if we couldn’t get deals funded early, entrepreneurs and investors alike would quickly grow skeptical of the whole proposition, and it would be tough to win them back. So our focus was getting deals funded early and grow over time, funding more and larger deals as we went. Now we have campaigns ranging from £20,000 to more than £3 million being funded through Seedrs.”
Lynn went on to explain why he and his team decided it was time to launch Seedrs:
“The idea for Seedrs emerged during my and my co-founder’s time at Oxford. Carlos had the idea of a platform for people to invest in startups like Kiva or Zopa, but with equity rather than debt. At first, I thought this was just a really interesting intellectual exercise. Still very much in a legal mindset (I was a lawyer in my previous life!), I thought the challenges around making this work legally were fascinating. I fairly quickly realised that it was not just theoretically doable in the UK but also a really compelling business idea.
“Early-stage equity investment is actually a vast area of the capital markets, but historically it was inefficient and chaotic. Everyone thought of early-stage investment as being venture capital, but that represented a tiny proportion of the overall market. Seed-stage businesses, along with the many other businesses at all stages that fell outside VCs’ interest areas, were in no-man’s land. Many relied on funding from acquaintances, but that only worked when the entrepreneur had rich friends and family. Then there was the angel community, which was uncoordinated and largely unprofessional, and bar a few very good accelerator programmes like Seedcamp, and specialist funds, that was about it.
“On the other side of this market, there were lots of people who were interested in early-stage businesses but had no way to invest in them. If you wanted to invest in a startup as an individual, you had to be an angel. Carlos and I liked the idea of being able to invest £500 or £1,000 in an interesting new business rather than £25,000. So we were looking at classic market failure: unmet demand and untapped supply, both waiting for an intermediary to bring them together. TheSeedrs concept as a solution seemed very apt.”
He also explained:
“Seedrs is one part of a much broader movement towards self-directed investment. This is an age where investors have easy access to technology and information. Old methods of investing, through off-line brokers and IFAs you meet on the golf course, seem antiquated to the younger generation. Whilst there is absolutely a role for wealth management in the investment space, there is a requirement for platforms that facilitate investment for a wider demographic. People want to make educated decisions on who and what they want to invest in directly, and build diverse portfolios accordingly.
“More specifically, I think we have very much opened the conversation about early-stage investment as an asset class. It used to be thought of as something that, outside venture capital, was the preserve of hobbyist angels, Seedrs has worked hard to change that pre-conception and make people see early-stage businesses as an important and potentially lucrative part of any investor’s portfolio. It will continue to take time but we are gradually normalising the perception of the space.”
In regards to Seedrs current challenge, Jeff added:
“Continually innovating and growing our product to accommodate customer requirements as the alternative finance sector develops. No matter what we do, our role at Seedrs is to show that equity crowdfunding is not a niche space; we have the opportunity to deliver something really big and we want to ensure that Seedrs is the company that achieves that.”