SyndicateRoom is one of the “big three” investment crowdfunding platforms in the United Kingdom. While it may not be the largest in terms of deal volumes, it has led the way for pairing professional investors alongside retail types for listed offers. This is important. Not only do all of their deals receive a thorough vetting by a known Angel or VC, but deal terms are exactly the same. That means crowd investors get in on a level playing field.
Investing in any early stage company is risky, but knowing a pro has reviewed the offer sends a strong signal to other investors that the offer is solid and their is no gotcha trap. The lead investor is also inclined to negotiate a fairer valuation – an issue that some industry followers view as a potential problem for crowdfunding as sometimes the hype of an offer may boost pre-money values beyond the point of common sense.
Based in Cambridge, SyndicateRoom has trail blazed a different path than the competition and in many ways is best in class. SyndicateRoom also offers access to Initial Public Offers on the London Stock Exchange. Once again, investors enjoy the same deal as the professionals.
SyndicateRoom additionally offers a passive EIS vehicle: Fund Twenty28. This highly diversified investment opportunity seeks to build a portfolio of at least 28 EIS eligible investments across a variety of business sectors. The Fund aims to generate a return of 20%+ IRR. For most smaller investors, this may be the best option to allocate a portion of your portfolio into early stage investing. It just makes sense.
Recently Crowdfund Insider corresponded with Tom Britton, co-founder and CTO of SyndicateRoom and former UK football player (soccer for the USA). A relocated Yankee, Britton found himself at Cambridge University earning his MBA along with co-founder and CEO Gonçalo de Vasconcelos when the duo hatched up the idea to create a different type of crowdfunding platform.
Can you provide an update number of firms funded and total raised to date? Also – how many active investors are participating on the SyndicateRoom platform?
Tom Britton: 106 companies over 130+ funding rounds (companies have come back for additional capital). Typically a funding round gets between 30-40 investors.
Each early stage investment engages with a professional investor (Angel or Venture Capital). How many different lead investors have participated on SyndicateRoom? Do they tend to repeat? How has this helped SyndicateRoom evolve?
Tom Britton: I don’t have this number as sometimes it’s a group, sometimes it’s a lead, sometimes one of those individual leads will also be investing in a syndicate. My guess is there’s been 50+ lead investors or groups, probably closer to 75 but I don’t have an easy way of documenting it. A lot of leads have brought multiple companies. Sorry I can’t quantify.
What industry types are you listing on your platform? Early stage or later? Are the funding rounds trending higher?
Tom Britton: Most of our funding rounds are the companies 2nd to 4th round, only around 10% of what we do is SEIS [Seed Enterprise Investment Scheme] eligible and we’re starting to see more series A rounds come to us to close out the round which is great news.
The rounds are definitely trending higher.
How important has the EIS/SEIS programs been to your platform growth?
Tom Britton: Not going to lie, about 80% of what we do is SEIS or EIS (as mentioned above around 10% is SEIS so about 70% of what we do is EIS eligible). Our investors are predominantly UK individuals who can benefit from the EIS benefits on offer.
[clickToTweet tweet=”Our investors are predominantly UK individuals who can benefit from the EIS benefits on offer #Crowdfunding” quote=”Our investors are predominantly UK individuals who can benefit from the EIS benefits on offer #Crowdfunding”]
What about Fund Twenty8. How is that progressing?
Tom Britton: It’s going incredibly well and the feedback from investors in the fund has been tremendous. Most have already asked when next years fund will open and we’ve had over 200 additional investors ask to be informed the minute it opens.
[clickToTweet tweet=”[email protected] has had over 200 additional investors ask to be informed the minute this fund opens #Crowdfunding” quote=”[email protected] has had over 200 additional investors ask to be informed the minute this fund opens #Crowdfunding”]
The UK Financial Conduct Authority will be updating its regulatory approach to crowdfunding soon, do you expect any material changes?
Tom Britton: I don’t believe so but you never know. I’m more conscious of the changes coming in from Mifid II and GDPR which will impact how companies interact with customer data and what is classified as personal data with things like ip addresses being included.
How is your public markets vertical growing?
Tom Britton: It’s growing steadily. We are conscious that we are still a small player in this space so we are trying not to bite off more than we can chew. The first year has been about proving we can operate in the space, the second year will be about optimising our offering and trying to carve out a niche for ourselves.
Where do you see the most opportunity to scale going forward?
Tom Britton: Scale rounds. Angels and individuals have given great support to companies in earlier rounds but when it comes to larger series A, series B and beyond, the individual investors are still being left out. It’s a large market that we hope we can bring efficiencies to.
Do you have any expansion plans?
Tom Britton: Never say never but, for the time being we know there is a lot more we can do in the areas we’ve already expanded to (vertically, not geographically) so we are going to ensure we’ve made the process and offering in these areas as sleek as possible before going elsewhere.