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 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 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 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.
We are beginning to receive the SEIS and EIS tax certificates from HMRC for the first companies to fund through Seedrs, and I wanted to take this opportunity to explain to you how the process works for you to claim relief. A detailed explanation is below, but the most important bit is that if you have made an SEIS- or EIS-eligible investment through Seedrs, please ensure that the postal address in your Seedrs profile is kept up-to-date, as we will be posting the relevant documentation to you when it becomes available.
One of the most misunderstood areas of early-stage investing is dilution. I receive lots of questions from investors about what dilution means for their investments and whether it is a bad thing.
Dilution is a natural part of the investment process and we see it as generally something to be embraced rather than feared. Sometimes predatory dilution can be used to take advantage of smaller shareholders, but the investor protections on Seedrs means that the dilution you see on a Seedrs investment is generally more likely to increase the value of your investment than to decrease it.
A core principle underlying the whole Seedrs approach is that investing in startups can be highly profitable so long as you have a highly-diversified portfolio. We built Seedrs to allow both big and small investors to build a diversified portfolio of startups instead of being stuck in just one or two risky deals. Diversification is the key to success in angel investing.
Diversification makes intuitive sense in any asset class, but it’s vital in an asset class such as startups where most investments will fail but the ones that do succeed can do so in a big way. Diversification is also supported by the data: the “Siding with the Angels” report by Professor Robert Wiltbank (Nesta, 2009) shows just how skewed the distribution of returns inside a portfolio can be and why that makes diversification vital.
So, yesterday was my girlfriend’s birthday. Of course I remembered this, due to the 4 calendar reminders, the Post-it note on my computer monitor and the fact that she had sent me 3 texts the previous day reminding me that I had promised to cook her a ‘special’ dinner.
Now I am a busy man. Seedrs is growing at a very fast rate, and I don’t have a huge amount of free time in the day. Honestly. So you have to sympathise with me when at around 2.30pm yesterday it dawned on me that creating this special dinner was going to be a challenge, considering I had not yet bought any of the ingredients. And with back to back meetings until 6.30pm and a train to catch at 7pm, it was not looking good.
Until recently, we have restricted Seedrs to pre-revenue businesses which hadn’t yet made money from their core business model. We imposed this restriction because we believe firmly that there is a profound gap in funding at the very earliest stages, and that seed-stage businesses can represent exceptionally attractive investment opportunities due to their valuations, growth potential and tax advantages.
Once you have invested in an EIS/SEIS eligible company on Seedrs, you may now be wondering how on earth you can take advantage of these incredible tax breaks. We’ve had a number of people ask how they claim the relevant tax relief, and how we ensure that an investment made into a company which is labelled as EIS/SEIS eligible will be eligible for relief when the investment closes.
We have written this post to help explain the EIS/SEIS process and our stringent procedures that we have in place to ensure that any investment made through Seedrs will be eligible for relief, if a listing is labelled as EIS/SEIS eligible.
This month, we’ve already seen the fourth Seedrs startup reach 100% of their investment amount. These successes have provided us a few early lessons on things for both entrepreneurs and investors to take note.
Setting up a business can be a hugely exciting adventure, but finding the funding to make it a success can be one of the most challenging bits. So, we’ve broken down the options for entrepreneurs and gone back to basics with the ABCs of raising early-stage capital.
One of the hardest parts of raising early-stage seed capital for a startup is agreeing a value for the equity on offer. At Seedrs, we love idea stage companies, but we have learned a lot about how investors view new startups. Sorry everyone…I have some bad news. An idea on its own is not really worth that much. There are lots of other people with great ideas.
Valuing an idea stage company involves several factors.
The real value in a business comes from how the idea is executed. While there may be loads of people with a similar idea to you, you have the opportunity to create a valuable business by executing the idea better. The problem is that for an idea stage business, seeking its first round of seed capital, it often hasn’t started to fully execute the idea enough to demonstrate value.
It’s relatively rare to get a lawyer excited. About anything. But, the introduction of the Seed Enterprise Investment Scheme (SEIS) in April was a big enough announcement to elicit wide-eyed disbelief and giggles of excitement from me. And yes, I am a lawyer.
SEIS is designed to help small, high-risk companies raise money by offering a range of generous tax reliefs to investors who purchase new shares in them. Seedrs will have a significant number of Seed EIS eligible companies – and any investment made in such companies through Seedrs will be eligible for relief (to the extent that the investors themselves are eligible). So, finding great, Seed EIS eligible companies in which to invest in will be simple.
Raising an initial round of capital for your early-stage startup can be overwhelming. So, we’ve created a quick list of tips for entrepreneurs looking to raise funds from the crowd to keep you focused, realistic and ready to succeed.
Read our tips below and if you would like a little more detail, check out my video discussing five of these tips over at the AXA Small Business YouTube channel.