Seedrs

Idea

Introduction

Seedrs is one of the world's leading equity crowdfunding platforms.

We allow investors to invest as little or as much as they like in businesses they believe in and share in their success. We allow ambitious businesses at all stages to raise equity capital and build community. And we do it all through a simple, online process.

This campaign forms part of a £10 million fundraising round led by Woodford Patient Capital Trust and Augmentum Capital. Those two institutions are investing £7.5 million between them, and we are opening the remainder of the round to existing shareholders and new investors.

Intended impact

There are vast numbers of growth-focused businesses who need equity capital to take their first steps, commercialise or scale. The market for this capital is historically opaque, inefficient and clubby. Many potentially great businesses struggle to raise they capital they need, and many of those who do raise capital want more out of the process than just getting a cheque.

Meanwhile, investing in growth businesses appeals to many people for many reasons, including financial returns; a desire to support businesses started by friends, family and community members; and the excitement and enjoyment of it. However, the transaction costs involved in making investments has meant that historically only people with lots of time and lots of money have been been able to invest in this asset class.

This is a classic market failure, and Seedrs solves it by providing a simple, online platform that benefits businesses and investors in five key ways:

1. Money. We give businesses access to capital from a wide range of investors, and we give investors the opportunity to invest however much they like and earn returns on dividend or exit.

2. Support. Businesses can get advice, support and connections from their wide base of investors, while investors can get involved in their investee companies or else be passive and watch them grow from afar.

3. Validation. Businesses get affirmation from lots of investors voting with their wallets; meanwhile, investors get the benefit of the wisdom of the crowds in selecting their investments.

4. Price. For businesses our commission is often less expensive than paying a lawyer just to document the deal, while the carry we charge to investors only on success is significantly less than they would pay to a fund manager.

5. Simplicity. Because we hold and administer the shares of each investee company as nominee, businesses only need to face one legal shareholder, while investors know that a professional firm is enforcing their rights through the lifecycle of the investment.

Substantial accomplishments to date

In the three years since launch, Seedrs has made itself one of the leaders of the equity crowdfunding space globally.

We have grown 15% month-on-month, and we are completing more transactions than any other equity crowdfunding platform in Europe.

We were the first equity crowdfunding platform in the world to:

- Receive regulatory approval
- Host crowdfunded funds
- Crowdfund a publicly traded company
- Open to investors and businesses across Europe

We have earned a number of significant accolades in the process, including:

- Winning London Web Summit startup competition (February 2012)
- Being named one of the top 20 UK startups for 2013 by startups.co.uk (December 2012)
- Being named to the Silicon Valley Comes to the UK 100 Club of businesses with the potential to generate £100 million in annual revenues (November 2013)
- Winning the Great British Startups Cup 2014 (July 2014)
- Being named by KPMG as one of the 50 best fintech innovators globally 2014 (December 2014)

Monetisation strategy

Seedrs earns money through two fees:

1. We charge startups a commission of 7.5% on the funds they raise. This means that if a startup raises £50,000, they get £46,250, and we earn £3,750. We occasionally reduce this commission for large, high-profile deals.

2. We charge investors a carry of 7.5% on any profits they make. This means that if an investor buys shares for £1,000 and sells them for £5,000, we earn 7.5% of the £4,000 profit, being £300.

Use of proceeds

We intend to use the proceeds of this fundraising round to expand significantly our marketing and platform development activities as we deepen our presence in the UK, build on our initial growth in Europe and launch in the United States (planned for later this year).