There are 3 types of crowdfunding:
- Rewards based – individuals contribute money towards some kind of reward, they are not investors as such. Examples: Kickstarter, Indiegogo
- Debt crowdfunding – individuals share a loan.
- Equity crowdfunding – investors buy actual shares in a business and share all the risks and then also reward.
Seedrs is an equity crowdfunding cross-boarder platform that operates all over Europe from its base in UK and Lisbon.
Interesting facts about Seedrs:
- In 2012 – Seedrs was the first crowdfunding platform with regulatory approval.
- Average deal amounts to 25 000 EUR with minimum investment of 10 EUR.
- Ventures give away from 5% to 40% of equity via the platform.
- So far 230 companies raised money through the platform.
- 1 out of 3 companies achieve their investment target.
- Platform investors averagely invest in 10 companies.
- Has an efficient tech and operations in place to track and follow all the deals.
Money is not the only thing you get
Value of the platform is not only in money, but massive interest from the crowd that invested in a startup. They are truly interested in your success- they’ll be beta testers, connectors, promoters, advocates of your brand, mentors.
8 reasons to choose Seedrs as your investment platform:
- Early adopters
- International exposure
- Structure of equity and corporate structure
One for all
Seedrs will be a sole investor on the table from a legal perspective – a nominee. The agreement has 4 levels of protection for investors. Seedrs will act as a nominee to take all the decisions except for volunteer sale of shares.
- After a screening process Seedrs accepts around 20% of submitted projects. Judgment is based on the following criteria: A project should be able to pass legal due diligence and be hot and trendy.
- Seedrs is reviewing all information that company is revealing, provides general due diligence. Other measures could be taken depending on the ‘red flags’.
- Company sets valuation itself.
- Investors undergo a simpler due diligence in form of quiz, to make sure that they understand all the risks. In addition there is a money laundering check .
- Review of the campaign takes couple of weeks, starting from the day of submission.
- Rejection is quick – in a week.
- Campaign has 60 days to hit the target. Successful ventures usually would reach it in 27 days.
- Process completion takes 2-3 weeks.
How to succeed in crowd finding?
1) Do your homework. Do as much as you can before investments and get your answers right.
2) Prepare campaign launch – develop your marketing strategy, depending on the investors type.
Investors network consists of 4 types of investors:
- Reachable – E.g. Friends, Family and Fools (FFF)
- Findable – on events or through other peoples’ networks
- Public – a pool of potential investors out there (conversions is low, but if you manage to reach enough of them…)
- Platform investors – registered on the platform.
Platform investors group would be one of the major contributors, but you have to evoke their interest – campaign should already receive some money from a soft launch (approx. 30% should be raised) to have better chances with platform investors. You have to turn engagement into conversations – answer quickly and in essence.
For the successful fund raising campaign one would have to combine all 4 categories- create a waterfall.
Think like ninja, be creative, hustle and persuasive!
Why to invest?
A lot of startups fail – that’s not a secret, but those that succeed outperform any other type of investment. An important thing is – to have a diverse portfolio and equity crowdfunding platform is the easiest way to do so.
Successful startups’ campaigns on the platform
A couple of examples.
Oppo Ice Cream – Oppo makes the indulgent healthy. Luxury ice cream that’s good for you & can be enjoyed guilt free.
Raised 300,008£ for 23.1% equity. https://www.seedrs.com/post_investment/15076
Success due to: charismatic founders and fun campaign
Assetz Capital – Leading peer to peer/marketplace business lender with 300% pa growth in lending.
Raised 3,204,760£ for 10% equity
Success due to: clients base
Soon: first Maltese company to be financed through Seedrs.