Crowd investment platform Seedrs has finally opened its doors, allowing British startups to use its platform to pitch for early stage funding.
The site, which we wrote about in May, has spent the last couple of months taking applications from a range of startups who want to use it to find investment — and now it’s let the investors in.
Seeders takes its cues from a range of other sites, like Angellist, Kickstarter and Funding Circle — but mixes them all together to produce something a little different. Essentially startups get to present their case in a straightforward pitch, offering a certain amount of equity in return for a certain amount of funding. It’s like the TV show Dragon’s Den, just without the bombast and fake arguments.
So far it’s going pretty well. There are 19 pre-approved startups in the system, looking for between £25,000 and £150,000 ($38,000 to $233,000) across areas like mobile commerce, big data, consumer services and B2B. At the time of writing, a few hours after the doors were opened, the most successful startup so far has achieved nearly 17 percent of its funding goal.
Investors can contribute just a tiny amount to startups they like — the minimum is £10 — but can go as high as the startup allows. It’s all straightforward, friendly and manages to balance the collective nature of Kickstarter with the sober of making an investment.
There are a few interesting quirks to the system, however.
First, startups are anonymized. If you’re not logged in to the system as an approved user, you can only see the bare bones about each project.
Second, investors have to answer a series of questions to determine their eligibility before they can really get inside the system — a process that presumably acts as a sanity check against people who think startups are cash cows, or that there are very few risks to investment. They also have to agree to quite a lot of paperwork before getting stuck in, which is not surprising since Seedrs actually manages the investment on their behalf.
Then there’s the business model. Seedrs takes 7.5 percent of any money successfully raised on the platform, so a startup raising the maximum of £150,000 will hand over £11,250 to the company. And then Seedrs also takes the same percentage from any returns an investor makes on. So if, say, that company raises its funding by selling 20 percent of its equity, and then exits (undiluted) for £1.5 million a year later — effectively doubling its money — Seedrs will take a further £11,250 from investors.
It’ll be interesting to see how it picks up.