Seedrs is an equity crowdfunding platform that “democratises investing in smaller enterprises,” says David Mozes, the company’s Benelux regional manager. It was launched in 2012 in the UK and opened a Netherlands office in 2016. The equity crowdfunding outfit also leads Europe in terms of the number of investors on its platform, deal flow, and funds raised, gathering GBP 125 million in 2017.
Seedrs is, however, not only a platform that brings together investors — VCs, angels, and anyone else who wants to invest in businesses — it is a place where companies can create and further develop the communities that make their businesses thrive, including finding new users for their products or services.
“It’s definitely not only about the funding,” Mozes reiterates, indicating that if companies are only interested in their platform because they want to raise money, then they may not be ideal matches. Additionally, the platform has an extensive reservoir of information on investing, explaining everything from how Seedrs are transparent in their business, to what investors are looking for in campaigns before they decide to invest.
What they do: Nominee structure
Investing is easy and available to anyone in Europe. Raising capital is also simple, with companies needing to submit campaigns, create a marketing plan and campaign video, launch, and receive funds once the round is closed.
Realising that early-stage investing can be complicated for both companies and shareholders, Seedrs employs a transparent nominee structure. Here, Seedrs are passive shareholders, managing and holding shares of crowdfunded companies for investors, while the investors maintain all the economic benefits that come with their investments.
From the investment-side, they offer three types of campaigns: equity, fund, and convertible.
Types of companies invested in
Fintech is the biggest draw for investors, followed by food and “funtech”. An example of the latter is Bolt, an electric scooter, which has been their largest funding round to date at EUR 3.2 million and the biggest equity crowdfunding round in Dutch history. Although these three categories are the largest, Seedrs is “sector agnostic,” and a wide range of companies can be found on the platform— from regtech to live cattle selling.
Typically, Seedrs looks for companies that are:
- looking to fund EUR 500,000 — EUR 2.5 million, half of which needs to come from an angel investor or VC (although Seedrs can fund up to EUR 5 million);
- European and have plans to expand more into Europe;
- growing their businesses and want to gain more awareness outside of the Netherlands or Belgium;
- have large communities, or are interested in growing them, and know how to create buzz around funding campaigns;
As the business is based in the UK, a country with a bustling crowdfunding market, the majority of companies funded hail from the UK. Yet, Mozes says the market in the Netherlands doubles every year, and that one of the most attractive points about the platform is that there is significant cross-border participation in investments.
How companies should use Seedrs
If companies are interested in Seedrs for funding, they are encouraged to use the platform as a co-investor in any funding round they may be launching. “The key word here is and,” Mozes says, indicating that companies should not view Seedrs’ platform as a replacement for their current funding strategy.
On the platform, rounds begin private, being available for current shareholders, customers, and companies’ networks, then after a couple of weeks, they go public. However, Mozes says that companies can keep rounds entirely private if they wish, as a complement to any additional funding they have raised.
Brexit and the future
With Brexit going into effect next year, Seedrs is preparing itself by engaging its UK legal team. Mozes indicates that Brexit will have an effect on their business, of which the precise nature remains unclear.
Seedrs is also focused on creating more liquidity on its platform and making companies more fundable. One of the ways they are doing this is opening up its Secondary Market, which lets investors on the platform buy and sell shares. Previously, users could only buy shares in companies they had invested in. Now, any entity with a Seedrs account can buy shares from any company on the platform. This adds to the already unique proposition of the market.
On February 28, Seedrs will co-host an event that helps startups improve their PR capabilities. You can find out about and register for this event here.
By Elliot Lyons, Research Analyst