The British crowdfunding platform Seedrs, which offers investors equity rather than “perks”, has become the first of its kind to open shop across Europe.
Seedrs officially began its UK operations in July last year. The firm is unusual in that it holds the shares in the startups crowdfunded through its platform, on the investors’ behalf as a nominee. According to CEO Jeff Lynn (pictured), this makes life much easier for the startups when they want to raise venture funding in the future, as VCs aren’t crazy keen on companies that have hundreds of early-stage investors – try getting all those people to sign the necessary paperwork, for a start.
Now Seedrs is going Europe-wide, taking on a range of rivals across different countries such as Seedmatch in Germany. Of course, operating across the continent gives Seedrs something of an edge when it comes to scale.
“A platform like ours is a network effects-driven platform,” Lynn told me. “The more investors we have, the more value we create for entrepreneurs. The more deal flow we have, the more value we create for investors. National borders are kind of arbitrary when it comes to investing and startups – offline, people tended to invest close to home, but on the internet why would you limit it to just one country?”
Scale isn’t the only advantage, though. Under European law, EU member states can allow the raising of up to €5 million ($6.8 million) through equity crowdfunding platforms – but they can also set the limit as low as €100,000, which many such as France still do. The UK set its cap at €5 million and, as that’s where Seedrs is based, that’s its limit across the EU.
“The individual country rules aren’t the ones that apply in our case – everything we do is under UK law,” Lynn said. “It gives us a huge advantage.”
Seedrs said on Monday that it now has more than 25,000 registered investors, and that it has funded 48 early-stage deals since it opened shop. In a case of crowdfunding Inception, Seedrs also said it would be raising £500,000 ($810,000) for itself, using itself, offering an 8.81 percent equity stake (presumably to be held by itself as the nominee) in return.
This article was updated at 2.20am PT to excise Seedrs’ claim that it was the first equity crowdfunding platform to operate across borders. A Swedish platform called FundedByMe is already operating in 7 European markets, though not all of them.