This week, CEO of Seedrs, Jeff Lynn, sat down with The Memo to share details about the crowdfunding industry’s growth and his opinion on competitor, Crowdcube.
During his interview, Jeff discussed Crowdcube:
“I have a lot of respect for the way Crowdcube [has] done some things, they have been bolder in trying to accelerate that normalisation [of equity crowdfunding]. Crowdcube I think from the very beginning has taken a much more one-sided view where their job is to get entrepreneurs funded, no matter what happens to investors.”
Lynn then explained:
“My great concern with [Crowdcube’s] transactional model is that you’re going to have a business that goes on to be hugely successful but, because you didn’t have the protections [for investors] built in along the way, those underlying investors might get wiped out. Crowd investors should be getting the same levels of protection as venture capitalists, angels and other investors get, they shouldn’t be second class citizen and it’s only [Seedrs] lifecycle model that affords them that.”
Also discussing crowdfunding’s failure rates, Jeff commented:
“Yes absolutely failure rates are going to go up, and are going to go up very significantly. We have always been very clear that one would expect about 80% of businesses that raise funds through equity crowdfunding will fail. What’s really important isn’t the failures, but how big the wins are. We are at the risky end of the spectrum but, ultimately we believe, also at the high return end of the spectrum.”
In regards to Seedrs’ expansion, Lynn added:
“We’re getting there, [in the US] it is taking longer than hoped purely for operational reasons… we hope to have our soft launch in the next few months at the very latest. The path we’re on is to make [crowdfunding] a mainstream investment for all the people who have money… we’re convinced in Europe and the UK [crowdfunding] will be a mass play.”
