Holiday survival guide from Seedrs

Still looking for the perfect last-minute gift for your loved-ones this holiday season? You’re in luck! We’ve compiled a list of offers, last-minute gift ideas and shopping tips for the savviest of gift-givers, from some of the most indulgent and interesting Seedrs-funded businesses.

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Convertible equity term sheet

As a follow up to the two-page plain English Seedrs Term Sheet we launched earlier this year, we now have a version of the document for convertible equity campaigns. We believe that raising capital should be transparent and simple – including nuanced fundraising structures like convertible equity.

Convertible Term Sheet

The new plain English convertible equity crowdfunding term sheet from Seedrs contains a summary of the key legal terms.

Seedrs convertible investments use exactly the same nominee structure, and go through exactly the same due diligence process, as Seedrs equity investments. For more information on the structure and due diligence process, please see our Term Sheet for equity investments.

Because Seedrs convertibles are a different type of investment to standard Seedrs equity, the investment process and documentation are a bit different. Our convertible equity term sheet summarises the differences between convertible and “normal” equity investments and sets out the key terms of the documentation.

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Seedrs Referrals and Fees – An Improved Approach

We are announcing today a significant expansion of our referral fee arrangements, as well as a new, more nuanced approach to our fee structure.

The Referrals, Company Fees and Investor Fees pages on the Seedrs site lay out the specifics, and this blog post gives you some background and context to these changes.

Referrals

Word-of-mouth is one of the most effective ways through which new investors learn about Seedrs, and we want to incentivise people to spread the word as much as we can.

We are therefore significantly expanding our referral fee programme as follows:

  • If you introduce an investor to Seedrs, we will pay you a referral fee equal to 50% of the company fees we earn from that investor’s investments over the next two years. This means that on most investments you will receive 3.75% of the amount invested by the person you referred. While this is a bit less than the 5% we offered under our old system, it now covers two years of investments rather than one —meaning that you will earn more from referring a regular investor than you would have in the past.
  • We will deposit your referral fees into your Seedrs account as you earn them, and you can choose to withdraw them or invest them at any time. Unlike our previous system, in which promotional funds could only be invested and not withdrawn, you now have the choice to take your referral fees in cash. So go out and buy that new Tesla.
  • You can also choose to pay it forward by having referral fees paid into the account of the investor you referred instead of to your account.

You can see more information about these referral fees on our new Referrals page and in our Referral Fee Terms. And if you have any questions about how these referral fees work, please do contact us.

Fees

When we launched Seedrs just over two years ago, we were keen to adopt as clear and simple of a fee structure as possible.

Too many financial services firms annoy their customers with complex or hidden charges, and we were—and are—determined to avoid that. We do not believe in hidden legal fees, payment charges, administrative levies or whatever else our competitors may choose to sneak in.

Instead, we set our straight 7.5% company fee (commission) and 7.5% investor fee (carry) because we felt that, in addition to representing outstanding value for the work we do (see our Company Fees and Investor Fees for an overview of everything that is covered by our fees), they are transparent and easily understood charges.

The Need for Flexibility

We have no desire to move away from that clarity and transparency. At the same time, we have come to appreciate as we have grown that one size does not necessarily fit all, and that an effective fee structure needs to be a flexible one.

This has been especially true as we have started funding larger transactions: while a 7.5% company fee is excellent value for relatively smaller deals, we appreciate that it may not be the right price for rounds above £/€ 500,000.

We’ve also taken on board feedback from businesses that they see funds coming from their direct connections as different from funds coming from investors who learn about their campaign through marketing efforts or by browsing the platform. We are still creating a huge amount of value with respect to the former—by providing a simple and efficient way to aggregate all of those investments—but perhaps not quite as much value as we do for the latter.

On the investor side, we recognise that some large investors want to use Seedrs but hold and manage their shares directly rather than through our nominee structure. The Seedrs nominee structure is designed to offer a full suite of investor protections to those investors who do not have the time, money or inclination to negotiate and enter into contracts with each company on their own. But it doesn’t mean that large angel investors cannot use us as well, and we want to offer a fee structure that works for them. You can read more about holding shares directly in our recent blog post.

A More Nuanced Approach

All of this has led us to adopt a slightly revised fee structure.

Our standard 7.5% company fee can now be reduced in three situations:

  • If a business is planning to raise more than £/€ 500,000, we are willing to discuss either reducing the 7.5% or capping the total fee amount.
  • If a business brings a pre-identified investor who invests £25,000 or more and holds his or her shares directly, we will charge no fee on that investment.
  • When a business brings any other investor who is not already a Seedrs member, we will reduce the fee we charge on that investment by 50%.

Meanwhile, we will charge investors no fee where they hold their shares directly rather than through our nominee structure.

We feel this fee this approach maintains our commitment to clarity and transparency while at the same time incorporating flexibility and tying our fees more closely to the value we create.

More details of this new fee structure are set out on our new Company Fees and Investor Fees pages, and please contact us with any questions.

Seedrs Acquires Junction Investments and Will Expand to the United States

I am very pleased to announce that Seedrs has acquired California-based Junction Investments.

We plan to use this acquisition to expand to the United States in early 2015. Junction’s co-founders, Adam Kaufman and Brian Goldsmith, are now Co-Heads of Seedrs America, and they will be leading this expansion.

The Seedrs and Junction teams are very excited about the opportunities that our combination creates, and I wanted to share some background to the transaction and an overview of next steps.Seedrs USA

A Global Platform

A founding principle of Seedrs is that investment in startups and growth businesses should be global. We believe in a future where entrepreneurs and investors from all over the world can connect online. Investors should be able to discover and invest in opportunities anywhere, and entrepreneurs should be able to access capital worldwide.

Financial regulation remains largely national or regional, however, and compliance with applicable law has always been a non-negotiable element of Seedrs’s approach to business. Building a global platform is thus a multi-stage process that involves identifying the right approaches and partners in different jurisdictions.

Having opened across Europe at the end of 2013, we began to look at the U.S. market at the beginning of this year. The U.S. has been slower to embrace equity crowdfunding than the UK and Europe have, and full-scale crowdfunding is not yet possible there. But with the opening of online investment to accredited investors at the end of last year (under Title II of the JOBS Act), and the prospect of wider crowdfunding on the horizon (under the yet-to-be-implemented Title III of the JOBS Act, or an amended version thereof), we feel that now is the right time to begin building our U.S. presence.

Junction

Adam Kaufman and Brian Goldsmith are two exceptionally impressive individuals. Adam is a graduate of Columbia University and Yale Law School and has worked as a corporate lawyer with Wachtell, Lipton, Rosen and Katz (one of New York’s pre-eminent law firms) and as an investment banker with Goldman Sachs. Brian, a graduate of Harvard University and Stanford Law School, served as a producer for the CBS Evening News, one of the leading television news programmes in the United States.

Adam and Brian came together to found Junction in 2012. Their vision and ethos were similar to ours: they wanted to provide a simple and straightforward way for a wide range of investors to access growth assets. They decided to focus initially on investments in entertainment assets, including Hollywood films, before expanding more widely.

Over the past two years, the Junction team has done a remarkable job of building the foundation of a great business. Among other things, they have built out an exceptional set of relationships in the investment and business communities, and they have gone through the arduous process of establishing a registered broker-dealer and an investment adviser (the two regulated entities that cover the equivalent of our FCA permissions).

At the same time, Adam and Brian believed that combining with a platform that already had significant reach and resources would allow Junction to move further and faster than it could have done on its own.

The Transaction

The management teams of Seedrs and Junction have been in contact for nearly a year, and it has been obvious from the outset that we would be a great cultural fit. We share a passion for connecting investors with opportunities to invest for growth, as well as a commitment to professionalism, investor protection, and compliance.

We began talks around a potential acquisition over the summer, and both sides quickly realised the tremendous potential a deal would have. We believe Adam and Brian represent the ideal partners to launch our U.S. operation. Meanwhile, the Junction team saw that joining forces with Europe’s leading equity crowdfunding platform could provide a powerful opportunity for rapid growth, both in the United States and internationally.

After several months of discussions, we signed documentation last month, and the acquisition closed on October 27, 2014.

Next Steps

Over the next few months, we will be working hard to launch Seedrs in the U.S. market, and we will announce when we are ready to go. In the meantime, American residents are welcome to sign up to Seedrs and have a look around, although they will not yet be able to invest or raise capital.

We believe that, as a combined company, we can do great things together, and we can’t wait to get started.

Wall of Success

What do you get when you have cool tech, like the Triggertrap mobile dongle, two awesome new interns you’d like to familiarise themselves with Seedrs-funded businesses to date, and a reception that needs a bit of colour? Check out the below to see for yourself.

 

Top venture capitalists talk about why they’re investing in PeerIndex on Seedrs

PI

PeerIndex is a multi award-winning big data startup that is raising capital on Seedrs.

This is an example of a new sort of Seedrs campaign, where individual investors have the chance to invest alongside top venture capitalists. VCs Meridian Venture Partners and Anthemis Group are both investing in PeerIndex’s campaign.

Here’s what Mitch Pender (Meridian) and Sean Park (Anthemis) had to say about why they’re investing in PeerIndex and why other Seedrs investors may find it interesting as well:

Mitch Pender (Partner, Meridian Venture Partners)

Mitch held senior roles in a number of successful entrepreneurial technology businesses before becoming a venture capitalist. Here’s what he had to say about why Meridian is investing in PeerIndex:

Sean Park (Anthemis Group)

Sean is one of the most well-regarded and colourful investors in the European venture capital world. He began his career in investment banking and was an early investor in such successful businesses as Betfair and Zoopla. Here’s what he had to say about why Anthemis is investing in PeerIndex:

“Anthemis Group was an early investor in PeerIndex. We’re excited about the platform they have built and are pleased to see their vision gain traction in the marketplace as more and more businesses understand the value of social data analytics and the unique value proposition of PiQ.  “Big Data”, “data exhaust”, “social data” are buzzwords that have captured the public’s attention in the past couple of years, but actually building tools that can make these data resources useful is not trivial. Azeem and his team at PeerIndex have been amongst the few who have been able to cut through the hype and actually build analytical tools that drive real, positive outcomes for their clients.

Looking ahead, while the social data analytics and sales & marketing support markets that are the focus of PiQ are vast, we believe there are a number of interesting potential future use cases for the PeerIndex social data stack, including in areas such as identity, KYC and even credit scoring. While these are not currently the focus of the business, they represent interesting upside options for future development or licensing of PeerIndex technology.

Finally, when investing in startups, our experience has taught us that the single most important (controllable) factor in determining success is the quality and character of the founders. In the years we have been working with Azeem, he has proven himself over and over again to have the vision, grit and perseverance to guide and grow PeerIndex through all the challenges they have faced. We are excited about the Seedrs campaign and look forward to welcoming the new investors into the company.”

To view the PeerIndex campaign, please click here.

Deposit, invest and create campaigns with euros

Euro crowdfunding

Since we opened up to Europe last November, a lot has happened. Investment through the platform has increased more than 4X and we’re averaging just over £1 million per month in funded campaigns. Around 35% of new investors have come from outside of the UK – we are very proud to now have users from almost every country in Europe (although we are still looking for our first investors both from Liechtenstein and the Holy See, but it shouldn’t be long before people there start using Seedrs). We beat the previous equity crowdfunding world record by raising £2.6 million for our own campaign from 909 investors, and are very happy that our record’s since been broken by British winery and craft brewer, Chapel Down. Because we just can’t settle, we also introduced – for the first time ever in equity crowdfunding – convertible equity investment and equity crowdfunding for a listed company. All of these are tremendous accomplishments, but there has been something missing.

We lacked support for investing and raising investment in euros. Not anymore.

We have never been shy about our international ambitions and, in line with that, Seedrs is now a fully multi-currency platform, with support for euros and British pounds (more currencies coming soon).

While it hasn’t put off European investment activity, this has been a feature in high demand from our users for quite some time. With part of the Seedrs team being based outside of the UK, we were definitely sympathetic.

Although hacking support for euros may seem like something that could have been done in less than 10 months, we strongly believe in truly excelling in terms of usability and simplicity for our users. So, quickly implementing a half-baked solution that would make the whole experience clunky and unreliable was not an option. We took our time. We wanted to learn how users from outside the UK were using the platform and we wanted to develop a solution that was simple, easy and reliable.

Any Seedrs user can now deposit, invest and create campaigns in either currency.

More importantly, we have created what we believe is a seamless experience and a smooth exchange between the two currencies. To achieve this, we worked together with our good friends at Currency Cloud (who process more than $7B in payments every year, across more than 40 currencies) to provide you with the ability to instantly, and securely, move funds between euros and GBP.

So, if you login to your Investment Account, you will see that you now have a GBP and EUR balance (at least for the time being, one of them is probably at 0). When you click “Deposit”, we pre-select the account that has most of your funds – but you can choose to deposit directly in another currency. If you already have funds, let’s say, in your GBP account and want to pay for an investment made in EUR (the first EUR campaign is right around the corner!) all you have to do is click “Transfer” to move funds from one account to the other. This action is completed instantaneously and funds will be displayed in your Seedrs account. It really couldn’t be simpler.

Our hope is that this improves your experience with Seedrs – especially for users in Europe.

Why equity crowdfunding a listed company is kind of a big deal

Public Company Crowdfunding

Equity crowdfunding is evolving quickly. Naturally, equity crowdfunding fills the funding gap that exists for many early-stage businesses that are too risky for banks, too early for angels and too small for venture capitalists. But now, later-stage companies are catching on to the power of professionally managed crowdfunding platforms (like Seedrs). What we are starting to realise is that equity crowdfunding works really well for certain types of business, regardless of what stage they are at.

This month, publicly-listed, award winning English winemaker and craft brewer Chapel Down (listed on ISDX) launched a £1.6M crowdfunding campaign on Seedrs. In less than three weeks, they overfunded to almost £4M, from around 1,400 investors – which makes this the largest equity crowdfunding campaign ever. This was the first time a public company – anywhere in the world – campaigned for investment via equity crowdfunding. This is an excitingly innovative approach to raising growth capital, especially when most companies at their stage, with their positive financial traction, traditionally reach out to institutions and large individual investors in The City. This is part of the continuing evolution in crowdfunding.

So, why does campaigning on Seedrs make so much sense for larger, listed companies?:

Companies need investment to grow
Regardless of stage, businesses often need capital investment for growth. Publicly listed companies are no different and look to raise money from institutions and retail investors alike. But when they do this the company is not actually raising money through the exchange. Instead, the brokers and placers are the distribution channels through which the institutional and retail investors are accessed. Seedrs, in the case of Chapel Down, is a new type of distribution channel through which Chapel Down as a publicly listed company can access retail investors who might not otherwise have been able to be reached.

Raising investment takes time
When raising investment traditionally through brokers, it can be immensely time consuming and inefficient. Roadshows, sales calls, meetings, emails – it can be draining on the resources of a company. Seedrs provides a very quick, efficient and online process for the publicly listed company to reach out to these investors, and for these investors to quickly and easily subscribe for publicly listed shares.

It’s more than just funding
Inviting customers to invest in your business is a great way to build long-term brand engagement and resonance among people who are already bought in on a transactional level. By inviting them the chance to invest and be a part of your future, you’re inviting them to have a deeper, longer-term relationship with your business. Because these customer-investors will be literally bought into the business, they’ll have a vested interest in helping with user research and feedback, buy your brand instead of competitors, becoming brand evangelists, and keeping in touch.

Combine online and offline investors
Quoted companies likely have previous investors who will have pre-emption rights and may want to follow on their investment. Or, they could have interest among outside institutions. Bringing these offline investors online (through a placing or new share offer), along with a crowd of customers and potential customers, is dramatically more efficient. All investors, regardless of size, can be offered the same transparent terms and same (ordinary) shares; shareholder documentation is standardised; and the ongoing relationship between the business and its investors is more effectively managed through a post-investment investor relations web portal.

Offer more than investment
Many UK businesses may qualify to offer advantageous tax reliefs to investors, including EIS, that wouldn’t be applicable for shares purchased on an exchange. Investors need to hold shares for a minimum period of time to qualify for the reliefs (three years in the case of EIS), but many investors find the tax reliefs highly appealing for longer-term investments and prefer to have access to investments that qualify. Crowdfunding through a platform also makes it possible to offer investors additional perks like free samples, invitations to AGMs, early-access to future products, tours and more. These additional rewards aren’t easy to manage on an exchange.

Business crowdfunding has evolved from raising equity for startups, to crowdfunded funds, to crowd equity convertibles and now crowdinvesting in publicly-listed companies. Our internal legal team and professional processes mean we can continue to offer new, exciting ways for people to invest in businesses of all stages, sizes and types.

London tech investors talk about Future Ad Labs

The Seedrs team recently had the chance to catch up with a few of the investors in Future Ad Labs. They’re an impressive mix of entrepreneurs, investors and advertising professionals. We asked them to tell us a little more about Future Ad Labs, their early investment into the company and why they’ve participated in the recent equity convertible round on Seedrs.

Richard Fearn

Richard is an early stage investor and mentor at Techstars and Seedcamp. He is one of the founders of the Friday Club, which is a popular event that brings together startups with advertising professionals. He gave us a quick insight into why he invested £50,000 in the most recent Future Ad Labs campaign.

Scott Button

Scott is the founder and CEO of Unruly Media. He talked to us about his experience in digital marketing and advertising and how he sees Future Ad Labs fitting into this landscape.

Russell Buckley

Russell Buckley was the VP Global Alliances of advertising technology startup AdMob, which sold to Google in 2010 for $750m. He is an active angel investor and a partner at Ballpark Ventures. Russell was an early investor in Future Ad Labs and has been a great source of industry knowledge and connections. We caught up with him at White Bear Yard to talk about his views on the Future Ad Labs convertible campaign and the impact of technology on advertising, media and marketing.

Nicola Horlick’s Glentham Capital returns to Seedrs

In July 2013, famed fund manager Nicola Horlick made history by crowdfunding her new fund management company, Glentham Capital. She came to Seedrs seeking £150,000 of seed capital so that Glentham could begin work raising its first fund. Less than 24 hours after going live, Nicola had raised the full £150,000 from 135 investors.

Nicola Horlick

In the year since then, Glentham has made great progress. Appetite for its anchor film fund has been so strong that it has raised the target from $100 million to $250 million; it has also started to look at raising additional types of funds and becoming a broadly diversified fund manager.

To finance this expansion, Glentham is now raising its growth capital round, and rather than pursue institutional funding, Nicola has again chosen to invite the crowds to be part of her success.

Details of Seedrs round
Glentham’s new campaign is now live on Seedrs. The firm is seeking £450,000 at a £1.8 million pre-money valuation, representing 20% appreciation over the last round.

Unlike most Seedrs campaigns, Glentham will not accept overfunding. Investments will be allocated on a first-come, first-served basis, and once the £450,000 has been subscribed, further investments will not be accepted. You can see the full details of Gletham’s round by viewing its Gletham Capital Seedrs campaign.

Chance for investors to ask Nicola questions
For investors who would like to learn more about Glentham, the company will be holding an investor conference call at:

Monday, 14 July 2014 at 1.30 pm London time.

Interested prospective investors are welcome to join either by traditional dial-in or through your web browser:

The phone number for the call is:
+44 (20) 7048-4146

Then enter the conference participant pin:
186475#

Or visit the webinar page at:
https://seedrsweb.clickwebinar.com/Glentham

Nicola, who is Glentham’s Chairman and Chief Investment Officer, will be joined on the call by Pandora Edmiston, Glentham’s CEO.

The call will include a brief introduction from Pandora and an update from Nicola Horlick on progress to date with the company and their plans for growth. It will also include a chance for potential investors to ask questions of Nicola and Pandora.

Seedrs opens Convertibles to the crowds

Seedrs achieved another first today by launching the first ever convertible investment round on a crowdfunding platform. Future Ad Labs, one of the earliest campaigns to raise money on Seedrs nearly two years ago, has returned and will be the UK’s first startup to use the new form of funding.

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The convertible will allow investors to invest in Future Ad Labs today, with their investment converting into shares in the future at a discount on the future valuation. This means that Seedrs investors will receive more shares for their money than future investors.

Convertibles are very popular among startups and investors in Silicon Valley. They offer a way to raise and invest money now, while deferring the need to place a value on the company until some time in the future. This can be particularly useful when a startup is looking to raise large venture capital funding in the near future, but doesn’t want a valuation placed on their company now which may affect those negotiations.

Following the launch of convertibles, investors can now use Seedrs to invest in the equity of high-growth businesses in three different ways. In addition to straight equity campaigns, Seedrs pioneered the use of fund campaigns last autumn, and convertibles represent our third offering.

All three types of campaigns are about investing in real shares: we believe that when you invest in a business at its early, risky stages, you should get to participate in its upside—which is something that debt and rewards don’t allow.

Each type of campaign in Seedrs gives investors a different way to get equity exposure, from investing directly into a single business (straight equity), to investing in a pool of businesses (funds), to joining a future fundraising round at a discount (convertibles).
For more information on how our three types of campaigns work, and how they differ from each other, please see our new guide the types of campaign.

Future Ad Labs has been a major startup success story. The company has developed a portfolio of game-changing advertising solutions that replace frustrating experiences on the web with interactive advertising formats.

One of Future Ad Labs’s predecessor companies, Digital Spin, began life by raising £60,000 from 70 investors via Seedrs in July 2012.  After merging with Future Ad Labs, the business went on to receive a further $1 million investment from venture capital firms as well as other industry angel investors in 2013. Passion Capital led the investment round and other investors include Balderton Capital and Ballpark Ventures.

For more information about Future Ad Labs, please see their campaign.

NearDesk raises one of the largest-ever equity crowdfunding rounds

NearDesk has just closed one of the largest equity crowdfunding rounds in Europe, raising just over £1 million pounds from 364 investors. This brings the total number of investors in the company to over 500 people. The most recent funding round included participation from several large investors including Juno Capital and Renaissance Capital Partners.

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GIving customers a vested interest
NearDesk is an excellent example of a company for whom the influx of new customers, advocates and industry influencers from an equity crowdfunding round is just as important as the cash raised. Like recent Seedrs successes Blue Crow Media, LoyalZoo and Shareight, NearDesk used their funding round as an opportunity to engage with their customer base.

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Guest user – My first 3 months as an angel investor

With stock markets dizzy eyed at what the ECB might do next, broader investor sentiment remains a bit muted into what is traditionally a sketchy time of year. The basic reason is that there are lots of people out of the office. High days and holidays loom large after a winter burning logs and watching re-runs of Dad’s Army and that means that the market takes on a lethargic air. Yet the startup scene is not known for its buy-in to holiday season and the Seedrs platform continues to be crowded with some attractive looking ideas.

A few months into my life as an angel and there are a couple of things that I’ve picked up. I thought I’d take a moment to share a few of the key things that I’ve learned from my foray into angel investing.

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Choosing to hold shares outside our nominee structure

Today we are announcing a new Seedrs policy that codifies an informal practice we have developed over time:

If an investor invests £25,000 or more into a given campaign, and she wishes to hold her shares directly rather than through our nominee structure, she is welcome to do so provided that the company agrees and the investment terms are the same. Shares held outside the nominee structure will not be subject to our 7.5% carry.

This blog post lays out the rationale for this policy, the practicalities for making use of it and a few other important notes.

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Equity crowdfunding term sheet

At Seedrs, we hold ourselves, our startups and our investors to very high standards because we want every company that raises funding on Seedrs to be set up with the best chances for success in the future. Achieving success for a startup often means being able to go on and raise follow-on funding from large angel syndicates or venture capital firms and eventually go on to a successful merger, acquisition, private equity investment or IPO.

Seedrs Term Sheet May

The new plain English equity crowdfunding term sheet from Seedrs contains a summary of the key legal terms.

We’ve always set our legal standards at the level needed to be compatible with the rest of the startup funding ecosystem. This means putting in place very specific investor protections, contractual agreements and making sure that all the paperwork is in order.

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