SeedLegals, a cloud-based platform that simplifies and cuts the cost of the startup fundraising process, has developed a new way for startups to raise funding – called ‘Instant Investments’.
The product is attempting to disrupt the way current funding rounds work, hopefully paving the way for a more ‘continuous funding’ model.
SeedLegals, which was launched in March 2017, offers legal advice and digital documents which allow UK startups to take on new investors as they emerge, rather than adhering to the typical 12-18 months fundraising cycle.
Investors can review and e-sign documents online, and instantly receive a share certificate as well as SEIS/EIS documentation.
This allows founders and investors to allocate shares, add investors, negotiate and complete a funding round completely online.
The company, which won Best in FinTech at UKTN’s Elevator Pitch LIVE last year, claims to reduce the time and cost to complete a round by 80%, and says it helps close two funding rounds every day.
The idea behind it is to give founders more flexibility and time to grow their business rather than them spending time pitching to investors.
Anthony Rose, founder and CEO, offered an example on how the new product works. “Let’s say that NewCo is looking for £500,000 in investment, at a valuation of £2m. Normally that would mean they need to find investors for that full £500,000 before they could close the round and get any money in. It could take months.
“Now, as soon as they have, say, the first £100,000 of investment lined up, the founders can choose to do a funding round of £100,000 with ‘up to another £400,000 of additional investment allowed anytime in the six months following the round. That allows the founders to quickly close the round, bank the first £100,000, and get on with growing the business,” he added.
Then, Rose said, each time they find an investor, they can send them a link to view the deal documents from the last round and a Deed of Adherence to sign to complete their investment.
SeedLegals is backed by Seedcamp, and secured £1m in July last year.