Alternative finance in the UK is set to double in the next 12 months and a big part of that is the success of equity crowdfunding platforms like Seedrs.
The startup has gone from strength to strength in recent years and last month announced it had acquired US company Junction Investments and planned to expand to the States.
We caught up with Seedrs cofounder and CEO Jeff Lynn to see what the move means for the fintech platform.
With the acquisition of Junction Investments, was it the company or the country that was more of a draw?
Both. We have been looking at the US market and considering the best way to approach it.
The three things we felt we needed to make it work were an outstanding team, deep market knowledge and relationships, and the necessary regulatory approvals.
Junction had all of these in spades and also proved to be an excellent cultural fit. Given that, doing the deal was a no-brainer.
Why is US regulation so tough on some fintech startups?
I think there are a number of challenges, but in online investments the issues are around the lack of adaptability of the regulatory system.
US securities laws are of a 1930s vintage and have a very rigid structure, and as much as one may try to tweak them, they do not fit well with the digital age.
The equivalent UK laws, by contrast, date to 2000 and are significantly more flexible, and this makes it much easier to apply them to innovative, digital-first forms of finance.
What market do you think is next after the US?
We don’t know yet. We’ve been very public in our intention to be a global platform, but the sequence and details are to be determined.
We plan to open up to US accredited investors in the first half of 2015. We’ll then expand the US proposition from there.
Do you think a global investment platform is possible?
I think it’s absolutely possible, but I won’t be drawn on timing just yet!
Are there any other UK fintech startups you particularly like?
Yes, many. Zopa and Funding Circle are both amazing P2P lending businesses – they are the debt version of what we do for equity and are run by outstanding leaders.
Transferwise is amazing on FX, DueDil on business information, Satago on credit analytics, MarketInvoice and Platform Black on invoice financing, and many others (not least Landbay and CrowdLords, two new Seedrs-funded fintech businesses).
London is the world capital of fintech, and I genuinely find it an honour to work among so many fantastic businesses.
Do you see Seedrs as a complimentary service or as a replcement to traditional financial institutions?
We’re complementary, at least to the good ones.
Venture capital and private equity investors who make their money by selecting good investments will always thrive, and we already work closely with many of them.
Those who make their money solely through using the lack of transparency in private capital markets to get proprietary dealflow – without adding anything on top – should not welcome the arrival of firms like Seedrs.