We’ll start hosting weekly Ask Me Anything (AMA) sessions with the entrepreneurs behind unlisted and listed companies, every Friday. We have a few lined up that we cannot wait to announce!
This week, we have a special treat coming. Jeff Lynn, the co-founder of Seedrs kindly agreed to tackle your questions on Friday at 10 AM on the 13th March.
Jeff and his co-founder Carlos came up with the idea of Seedrs during their time at Oxford.
Carlos had the idea of a platform for people to invest in startups, with equity.
Jeff was a lawyer in previous life, and he was fascinated about the challenges around making this work legally. He quickly realised that it was not just theoretically doable in the UK but also a really compelling business idea.
As many in our community know, early-stage equity investment is a vast area of the capital markets, but historically it was inefficient and chaotic. That’s the problem Seedrs is working to solve! Some notable raises on the platform include Revolut, Perkbox, Wealthify and Urban Massage.
Drop any questions for Jeff in the comments!
Official Bio
Jeff Lynn is Executive Chairman and Co-Founder of Seedrs, one of the world’s largest equity crowdfunding platforms. In addition to his work at Seedrs, Jeff also serves as founding Chairman of The Coalition for a Digital Economy, a non-profit advocacy group for digital startups and SMEs. He has been named one of the 100 most influential men in Britain by GQ and one of the ten coolest people in UK tech by Business Insider. There has been over £840 million invested on the platform, funding 980 deals since 2012 including Revolut, Perkbox, Wealthify and Urban Massage. Today, Jeff is driving forward Seedrs’ plans to be a full-scale private equity investment platform where investors can buy and sell shares in unlisted companies, and where ambitious entrepreneurs can gain investment for their businesses, building communities in the process.
Despite arguably having a superior platform for investors e.g. features such as their secondary market, many big names have opted to use Crowdcube instead e.g. Monzo, Freetrade, Curve. Why does Jeff think this is and what are Seedrs doing to change that?
Has there been any progress so far on entering Asia after the Fintech Bridge ? What are your views on the Hong Kong rules on sophisticated investors for ECF with a high net worth test versus the UK 10 questions ? Are Hong Kong too restrictive, or are the UK rules too low threshold ?
Who do Seedrs consider to be their prime customer , the founders and promoted companies, or the underlying crowd investors ?
When looking at for example pre emption rights and taking on , or waivering what is the process for deciding what is in the crowds best interest ?
Could there be crowd votes to look to ensure that the nominee understands the wishes of the crowd in such a situation and doesn’t second guess
We all know that ECF is high risk and would expect say 80 to 90% failures. Do Seedrs have any processes that can identify early warning signs of problems at a promoted company eg FB, Twitter etc dial down, lack of the quarterly reporting to Seedrs and Crowd, missing CH filings etc. If they do what actions do they take or have the ability to take to protect investors interests , or is “health” monitoring outside of the role of Seedrs and the Nominee once businesses are funded.
This is one of the problems I have with a non direct investment as the Company has no obligation at all to me so it would good to know where Seedrs and Nominee stand on this
With the export CSV can we get the date of investment, company number, date of issue, HMRC office, and unique HMRC investment reference?
What due diligence is done on companies pre-campaign and post-campaign?
There have been a few pre-emption rounds lately with barely any information. How can information available in pre-emption rounds be improved? More generally what actions can Seedrs take to improve quality of information available to crowd investors?
Can Seedrs make it easier to understand progress in subsequent rounds? It would be great to be able to see what was projected previously vs what happened since the last round.
I have rarely or never got the annual accounts of any of my invested companies at Seedrs and only get in the most cases the one page set filed at CH. Roughly what % of companies comply with the CH and send the Nominee as shareholder the accounts they are legally obliged to with a summary PL ? Is there any reason why these accounts cannot be posted on the closed investors forum.
As a investor top line gross revenue and costs , even at the very summarised nature for the accounts for shareholders gives valuable information such as gross revenues compared to pitch, and year on year revenues.
Is the lack of providing these due to companies not complying with their legal obligations or the Nominee not considering it relevant to the underlying investors
What would you consider the main pros and cons of direct equity v a convertible note ?
Convertibles are clearly leading tool at early stage in the US and are there any main reason why you think the have not really taken off in UK given they are generally a lot easier to deal with in terms of legal work and not being so concerned about the valuation ?
Do you think that a convertible also put the plant in the founders mind that equity is not “free” money as it is deemed as debt and hence can help with the founders treating funded cash with respect and a scarce resource
Good question! We want our secondary market to be as vibrant and open as possible, but we also want to give companies the option on how and whether to participate. The vast majority of our portfolio companies have been very happy to be traded openly on our secondary market, but a few have either opted out or decided to put restrictions in place. In the case of Revolut, they have so far asked that shares trade only among their existing holders. We are in talks with them about potentially getting rid of this restriction, as we’d love to let other people buy in if they want to. But we’ll only make the change if Revolut is happy with it.
I think both Crowdcube and we have built very effective platforms, and different companies have prioritised different things in choosing a platform to use. High-profile companies like Allplants, Urban Massage, Revolut (for their second round), Perkbox, JAJA Finance and many others picked us in part because of our secondary market but also for other reasons. Meanwhile some companies have chosen to go with Crowdcube, and I’m sure they’ve had their own very good reasons for doing so.
One thing that I do think made Crowdcube more attractive for some companies in the past was that they allowed investors invest directly (as opposed to through a nominee) if they wanted to do so; while we believe our nominee structure adds a huge amount of value for investors and businesses, we recognise that some people want to invest directly, and so at the end of last year we brought in the option for direct investment too (details here for anyone interested: Introducing Direct Investment - Seedrs Insights).
We do have a API, and at the end of last year we put it to work for the first time in connection with the Oval Money campaign (where Oval users were able to invest directly through their app – see Oval Money connects with Seedrs for in-app investment opportunities). We’re going to be deploying more widely very soon.
Anytime we raise money, we will do our very best to ensure that we can open a portion of our round to our users. I can’t say much about exact timing of our next round, but we’d love to have you in it when the time comes!
