Author Archives: jeffseedrs

About jeffseedrs

I'm the CEO and co-founder of Seedrs.

Seedrs Welcomes Domaine Chanzy as First IPO Campaign

Domaine Chanzy Seedrs

Today sees the launch on Seedrs of a campaign for Domaine Chanzy SA, a leading Burgundy winemaker. What makes this campaign exceptional is that it is part of Domaine Chanzy’s IPO on the London Stock Exchange’s Alternative Investment Market (AIM). The ticker symbol will be “WINE”.

Last September, Seedrs broke ground by hosting the first-ever equity crowdfunding campaign for a quoted company, Chapel Down. That campaign was huge success, raising £3.95 million through its crowdfunding and placing components.

At the time, our Chief Investment Officer, Tom Davies, said on Bloomberg that he thought it was only a matter of time before we started seeing IPOs raised through Seedrs. Even he didn’t realise that it would happen so soon.

Domaine Chanzy is looking to raise a minimum of £1.9 million to fulfil the ever-increasing demand for its award-winning wines and satisfy its working capital requirements. Upon admission, the winemaker will be the only French company listed on AIM. In parallel with crowdfunding campaign, Domaine Chanzy is raising funds through a placing led by several City corporate finance firms.

The Domaine Chanzy campaign is a significant step forward for equity crowdfunding in Europe and opens up the opportunity to participate in IPOs to a much wider range of investors. Here are a few reasons why we think it’s so interesting:

  • Investors large and small will be able to invest as much or as little as they like, from £10 up.
  • In addition to the shares they purchase, investors will be offered substantial discounts on Domaine Chanzy wines. Those who purchase a minimum of 1,000 shares (£1,200) will be entitled to discounts of up to 55% on wines ranging from Domaine Chanzy’s entry-level offerings to its premier Grand Cru.
  • The shares will qualify for Enterprise Investment Scheme (EIS) relief.
  • Investors who invest through Seedrs will be represented by us as nominee. This means that they will not need to establish separate brokerage or trading accounts. Investors will be free to sell their shares on AIM at any time (provided that sufficient demand exists).

We are proud that a company with a regional wine making heritage that goes back almost 250 years chose Seedrs to raise funds in an innovative way. It’s a great opportunity for the company to raise investment from a larger, more diverse, base of investors, enhance its profile among UK and other potential consumers in Europe and an appealing way to build long-term brand engagement among a wide base of investors.

Our vision has always been to provide a platform for people to invest in the businesses they believe in. Being a part of the AIM float for Domaine Chanzy further showcases our dedication to innovating fundraising and democratising investment.

To see Domaine Chanzy’s campaign, please visit: https://www.seedrs.com/chanzy.

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.

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.

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.

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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Welcoming the new FCA crowdfunding rules

In March the FCA enacted a new set of equity crowdfunding rules. It may come as a surprise to some, but equity crowdfunding has been regulated in Britain since 2000, long before crowdfunding even existed as a concept.

FCA Equity Crowdfunding Rules

The Financial Services and Markets Act requires firms that arrange transactions in investments, including shares, to be authorised by the appropriate regulator and adhere to a strict set of regulations. That was true regardless of whether those transactions were arranged online or offline, and it applied just as much to novel platforms as to old-fashioned investment firms.

When we were building Seedrs, we thought that rule was quite clear, and as a result we waited to launch until we had authorisation from the Financial Services Authority (now called the Financial Conduct Authority, or FCA).

New UK equity crowdfunding rules

Unfortunately for the industry, one platform ignored these rules and launched without authorisation, before eventually being compelled to seek approval. Shortly afterwards, the FCA decided that, in order to avoid a repeat of this type of behaviour, it would adopt rules specific to equity crowdfunding.

After a consultation process, the new equity crowdfunding rules were enacted in March 2014. Seedrs welcomes the new rules, as we believe they provide clarity to investors and platforms alike. Proportionate regulation helps markets thrive, and we believe the rules the FCA adopted strike an effective balance—and certainly one that is better than what many other countries are currently proposing.

Who is eligible to invest through crowdfunding?

As it happens, the new rules do not apply to Seedrs directly, as we have chosen from the beginning to be regulated as a” fund manager” rather than as a mere arranger. This is because, beyond simply introducing investors to startups, we act as their nominee, enforcing shareholder protections and helping to ensure that they earn returns from successful businesses—something that many other crowdfunding platforms don’t do. We’ve long advocated for the importance of a nominee structure.

Importantly, the exact same investors are eligible to invest through Seedrs as are eligible to invest through the platforms that come under the new rules.

In both cases, investment is open to any investor who can demonstrate that he or she has the experience and knowledge required to understand the investments being offered. Under the new crowdfunding rules, this is called an “appropriateness test”, whereas under the Seedrs structure it is called an “elective professional client categorisation”, but the standard of the test is the same.

Crowdfunding Regulations

Seedrs combines true crowdfunding with professional grade investor protections.

One difference that does result from our regulatory categorisation is that investors who use Seedrs are not subject to the much-maligned “10% requirement”, which restricts investors to investing no more than 10% of their net assets in crowdfunding investments per year. That said, we encourage all investors to build diversified portfolios and only allocate what they believe to be a reasonable proportion of their capital to early-stage investments.

Regulation will continue to be an important part of the crowdfunding discussion, and as the industry grows, there will likely be further modifications of the rules. We look forward to engaging in this process: having been the first regulated equity crowdfunding platform in the world, we believe that complying with applicable law is essential. We are pleased that the clarity provided by the new rules will help to ensure that others do so as well.

SHAREIGHT – A new Seedrs record

Over a 17-hour period from yesterday afternoon until early this morning, mobile shopping startup SHAREIGHT raised £350,000 from 95 investors. This was a remarkable achievement that shows just how powerful a well-executed equity crowdfunding campaign by a highly appealing business can be.

Shareight Seedrs

SHAREIGHT provides mobile curation for people to choose and recommend eight favourite items.

SHAREIGHT were able to galvanise such decisive support because they have spent considerable time building relationships with angel investors and the equity crowdfunding round fits into their overall capital raising journey.

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How to create a Seedrs campaign

In the year since Seedrs launched, we have been learning constantly what differentiates successful from unsuccessful campaigns. The more we learn, the more we try to communicate to the entrepreneur what does and doesn’t work so that they stand the best chance of raising the funding they are seeking.

Join Seedrs Now

Earlier this month, we published a blog post about the importance of momentum. TechCrunch also ran a piece based on the data we had gathered.

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It isn’t nominal – Why a Nominee Structure is Vital in Equity Crowdfunding

One of the most important features of Seedrs is our nominee structure, whereby we hold and manage the shares of startups on behalf of the underlying investors after an investment is completed.

Equity Crowdfunding Nominee

Using a nominee structure makes equity crowdfunding easier to manage.

While it may seem like a technical point, this type of structure is actually essential to any equity crowdfunding model: it is necessary not only to enable startups to raise follow-on funding but also to ensure that investors’ interests are protected.

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Do you need financial projections when raising startup capital?

None of the the startup campaigns on Seedrs include financial projections. This was a conscious choice by us when we built the platform, and I thought I’d take a moment to explain why we made that decision.

Financial projections are always speculative. Even for the most well-established companies, saying what will happen in the future involves a substantial amount of guesswork.

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Why now is the time for European startups

It may seem like an odd choice to be launching an investment platform in Europe these days. Granted, for the moment Seedrs is limited to the UK, which is somewhat insulated from the most extreme distresses of the Eurozone. But the economy is in far from ideal condition even here, and and in any event we make no secret of our ambition to expand to the Continent as soon as we can. Are we crazy, or is there method in the madness?

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Seedrs FSA Authorisation

After two years of preparation and a year-long application process, Seedrs was authorised by the Financial Services Authority (FSA) this past Friday, 18 May. Our application had been approved in March, but now the final technicalities are all wrapped up. You can see our entry in the FSA Register by searching for Seedrs.

FCA (formerly the FSA)

FSA is now known as the FCA.

I want to say a word about why we see FSA authorisation as so critical, especially given that there are other platforms in the market that have been operating without it.
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