Equity crowdfunding platform Seedrs has announced plans to launch in the US following its acquisition last year of California’s Junction Investments, along with changes to alternative finance legislation across the pond.
On Friday, the US Securities and Exchange Commission voted to implement Title III of the JOBS Act, which Seedrs says provides the significant change needed to create a similar legislative environment for crowdfunding to that seen in the UK.
The company says that compliance with relevant local legislation had always been a “non-negotiable element” of its strategy.
“The UK has been significantly ahead of the US on equity crowdfunding,” CEO Jeff Lynn told Tech City News. “Whereas the UK accepted it from very early on, and quickly moulded applicable regulation in order to formalise it, the US has taken a much longer time to embrace this important form of finance.
“Even now, the rules adopted by the SEC leave room for improvement and are not up to the world-class standard set by the UK, but the US is at least headed in the right direction and will undoubtedly continue to refine as time goes by.”
SEC chair Mary Jo White said of the legal changes on Friday: “There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need.”
Seedrs, which has sealed some 270 deals across Europe since it launched in 2012, expects to conduct a beta trial with a small number of campaigns “within weeks”, followed by full US launch early next year.
Q&A with Jeff Lynn on the story so far…
How much do companies usually raise on Seedrs?
Companies using Seedrs raise on average £3.5m per month for their equity crowdfund campaigns.
Do you have an average level of equity exchanged?
Each business offers investors a different amount of equity based on the amount it’s raising and stage it’s at. The average across the Seedrs platform from idea-stage to publicly-listed businesses is 17%.
What types of investors do you see?
Investors on Seedrs range from experienced angels and venture capitalists, to professionals who work in financial services, marketing, law, HR, IT and more, to people who are more nascent investors who like the idea of investing a little into a brand they love, or a friend or family member’s business. The ‘crowd’ on Seedrs is really rather varied.
What are some of your most notable raises?
Publicly-listed Chapel Down raised £3.95m last Autumn from over 1,400 people – becoming the largest equity crowdfunding campaign ever.
Tossed raised £1.26m over the Summer, which was the largest food brand to raise equity crowdfunding and counted tennis player Andy Murray as an investor.
And our own Seedrs crowdfunding rounds of course! We raised £2.5m in January 2014 from over 900 investors and £2.5m in August 2015 as part of our £10m Series A round, the largest-ever equity crowdfunding Series A.
I’m impatient. Any exits yet?
Not yet. It takes a few years for quality companies to grow to a point where they’re ready for an exit.
And as the SEIS and EIS tax schemes are so prevalent in the UK, many businesses are waiting to look for exit opportunities before the three-year holding period required for investors to pay no Capital Gains Tax on their investments.
But our first vintage has gone on to do well, raising successful Series A rounds, winning very impressive awards and expanding internationally.
We’re with businesses every step of the way – from funding through to exit – so we look forward to reporting successful exits to investors and the market as soon as they arise.