Seedrs becomes first equity crowdfunding platform to operate across Europe

9 Comments

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.

9 Comments

RedFerrari

Seedrs is an arrogant unprofessional moronic enterprise, a waste of time for many entrepreneurs. European operations of this hardly established UK company are a means to fuel the ego of the founder rather than making any business sense.

Consider that in order to have your funding campaign listed you must satisfy Seedrs staff that your idea/concept is a good one, you would think that it should be the investors deciding but Seedrs has different ideas , so concepts like ‘exercises for pregnant women’ pass while others fail.

Just my opinion folks.

Rob Murray Brown

Just looked at Fundedby me – v few equity offers – could only find one small £50k suceess – seems to be mainly reward based projects so not really in the same league as Seedrs and Crowdcube.

Rob Murray Brown

Equity crowdfunding maybe sitting on a ticking bomb – why would the whole of Europe want to join in? There have been just 100 UK businesses funded by all the UK platforms – none in Crowcube’s Swedish operation to date.

3 for certain have closed, most have not reported yet and will not for the next 12 months. Businesses that have returned for second and third rounds have shown just how wildly optimistic their sales projections were – some have failed to raise again as a consequence. So until there is some evidence that not all of these 100 business are going to close losing investors £20m plus (actually 50% of that is the UK taxpayers’ money). The UKCFA, the self styled sector grouping, has allowed people like Simon Dixon to be directors – Dixon is a serial fantasist and his site Bank to the Future is full of false information and very poorly put together business plans. It certainly gives their credibility a big kicking.

If, as i suspect, most of the Crowdcube successes either close (50 out of 80) or just trundle along with zero return (25 out of 80), then equity crowdfunding will collapse – which will be a shame. Had the platforms been directly liable for the information they publish and less keen on glitzy PR then it might have succeeded. The jury is out – Europe is a red herring.

Daniel Daboczy

Hmm. Not entirely accurate though. FundedByMe.com is operating in 7 European countries plus Singapore.

David Meyer

Thanks for that. I wasn’t previously aware of FundedByMe, and have edited the article accordingly.

Steven

Ah ok – I was not aware of them. I had assumed that some other platforms would indeed offer some limited cross-border funding, but it seems that Seedrs is the first to allow investing “across” Europe – i.e. every country in Europe. That’s what is exciting to me.

Disclosure – I’m a Seedrs investee.

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