Open4Business September 2017
Five minute Q&A with Seedrs
Seedrs is an equity crowdfunding platform which launched in 2012 and supports start up and growth-focused businesses to raise investment from the crowd, angels and VCs in a single platform.
To date £230M has been invested into 510 businesses via Seedrs. Adam Hardy, from Seedrs breaks down how it all works.
What is equity crowdfunding?
Equity crowdfunding allows ambitious, early-stage and other growth-focused businesses to raise capital from a large and diverse group of passionate investors in exchange for a portion of equity.
Previously, this type of investing was only readily accessible to venture capitalists and angel investors with plenty of time and resources at their disposal. Many businesses would struggle to generate the initial few rounds of funding needed to build the momentum required for true growth.
By democratising investment on platforms like Seedrs using an efficient, online process, everyone now has the opportunity to invest in early-stage and growth-focused businesses they believe in. Entrepreneurs not only raise capital but also generate support for their businesses, with many investors being willing and able to lend support and mentorship in the same way as angel investors, and becoming brand ambassadors and valuable customers.
How does crowdfunding with Seedrs work?
Seedrs works with the business to create a ‘campaign’. This campaign is then accessible on the Seedrs platform, where investors can choose to invest as little (from £10) to as much as they like into the business in exchange for equity.
One of the most important features of Seedrs is our nominee structure, whereby we hold and administer shares in start-ups on behalf of the underlying investors after an investment is completed. Essentially, you get the power and support of the crowd, but none of the administrative or financial hassle that may come from having thousands of investors. We also give consents, sign waivers or take whatever other actions are needed to ensure that the company can progress with its growth, and future fundraising, down the line.
Is there a cost to the business?
Seedrs has a straightforward fee that applies only if investment is successfully raised: 6% of funds raised + 0.5% payment processing fee + £2,000 flat completion fee
Is there a particular type of business that tends to use the platform to raise funds?
We work with businesses at different stages: start-ups, early-stage and growth businesses.
What amount can they raise up to?
Investment up to €5m (or current Sterling exchange equivalent)
What do business owners need to consider before starting a campaign?
Seedrs provides entrepreneurs with access to an international community of active investors, and can work in tandem with angel or venture financing, allowing your business to obtain a diverse range of value added capital.
We welcome submissions from businesses operating in any sector, and you are welcome to submit a campaign at any time. Each campaign submitted is reviewed on a case-by-case basis by our investment team, who reference the following criteria to assess viability:
Development – investors will usually want to see a product fully-launched, or ready to launch.
Reach – the beginnings of a community or customer base around your business is imperative, and we’’d expect a chunk of investment to come from them to generate initial momentum and interest in your campaign.
Valuation – investors will want to see a realistic valuation, so this should be a fair and clear representation of where your business is, and not where it might be one day.
This list is by no means exhaustive, and fulfilling the criteria will not necessarily guarantee a successful raise on Seedrs, but it’s a useful starting point for any business considering investment.
What are the key ingredients to running a good campaign?
In simple terms, success is raising your funding target in less than 60 days and creating such a demand to invest in your business that you over-fund. Aside from raising investment for your business, you can also gain success from: generating brand awareness; increasing your user base; creating new brand evangelists.
What do the successful campaigns have in common?
It’s important to note that a crowdfunding campaign on Seedrs can be more than getting the investment you need. It’s a unique opportunity to acquire new users, gain exposure for your business and create a team of brand backers. The most successful campaigns view the crowdfunding campaign as a marketing opportunity and do the majority of the planning, budgeting and trafficking before the campaign launch date.
What would you say is a big no-no?
How can people find out more info about crowdfunding via Seedrs?