Seedrs has launched its secondary market for securities in crowdfunded companies. According to Thomas Davies, Seedrs Chief Investment Officer, the market launched with 111 share lots in over 80 different businesses. The market will remain open for seven days and will reconvene the first Tuesday of every month.
During the Beta launch, Seedrs Secondary Market will only allow existing shareholders in a business to trade shares. Pricing will be set by Seedrs based upon operational data Seedrs maintains on each listed company. Seedrs has indicated its intent to introduce a bid/ask system at some point in the future.
The selling process allows shareholders to sell up to a maximum of 3 share lots each with a max value of £1000. Following a review process, the shares will then go to market and potentially be sold. Seedrs expects to close the trades “within days” of the market close.
Seedrs has leveraged its Nominee Structure where listed firms have a single shareholder on their cap table to streamline trading. Since the company only deals with a single entity trading in their shares is far simpler. Because the Nominee is managed by Seedrs they handle all the paperwork. This is better for the companies and can be better for the shareholders. Without the Nominee structure transactions can be more convoluted.
Creating liquidity for early stage companies is an important element of investment crowdfunding. Allowing shareholders the ability to sell (or buy) their securities adds value to the entire crowdfunding ecosystem. Seedrs competitor Crowdcube has announced its intent to launch a similar feature but no news on when their secondary market will launch quite yet.