Companies did raise money before CC and Seedrs and they still do, in fact I think most of the ones that go to these two platforms arenāt the best quality.
2 Likes
Any takes on the 60/40 split with Crowdcube ending with 60% and Seedrs with 40% once merged?
Havenāt had chance to read yet but can you trade Freetrade? My understanding is that Freetrade shares are held by Freetrade themselves and not Crowdcube nominee so will this impact selling ability?
1 Like
You know you live in Tory Britain right? They let Just Eat and Hungry House merge which I thought was pretty shocking.
That said, would sites like this even be on their radar.
Ok, my bad everyone. There are in-fact loads of crowdfunding websites Top 8 Crowdfunding Platforms For Businesses to raise funds that I hadnāt seen before. So not likely to be a competition issue.
1 Like
Seedrs just announced a partnership with Capdesk (where our FT shades are held). So even without the merger it was going to be inevitable that shares would have become tradeable on Seedrs at some point in the not too distant future. No doubt this will speed up the process.
1 Like
loads of crowdfunding websites that I hadnāt seen before
I think thatās exactly the point though. To use the example from earlier in the thread, Iād bet there are a bunch of Cola brands that you havenāt seen before too. If the two players that basically occupy all the public mindshare merge, the fact that thereās still a bunch of minnows that no-oneās heard of doesnāt fundamentally change the situation.
1 Like
Equity crowdfunding is pretty new and pretty niche anyway. Most of the general public have never heard of Seedrs or Crowdcube. Even if they are the big players they arenāt that big in the grand scheme of things.
1 Like
I agree that itās niche. The point still stands though, that within the equity crowdfunding sector itās bad for competition. Whether the sector is well-known is a separate point.
2 Likes
Financials released from Seedrs arenāt good, but in this light the merger makes a lot of sense.
Thereās a good tweet below showing theyāll need around a 40% cost reduction to break even. I imagine theyāll use a introduce a combination of upfront fees and carry to increase revenue, as well as expand their secondary market offerings.
3 Likes
that will no doubt have a dramatic impact across both organisations - and as others have mentioned it will also be a huge challenge to overcome the cultural differences
1 Like
I think that itās being done via a Scheme of Arrangement is quite interesting and not really been looked at to understand what the reason is for that.
Not sure if itās being done as a scheme needing 75% shareholder approval in relation to a takeover or a scheme that needs 75% creditor approval in relation to debt restructuring (last yearās convertible not yet converted ?).
Its could be interesting if the first as the nominee would hold the casting vote and in my view, they should be canvassing the crowd on how to vote if they really believe in the wisdom of the crowd and minority shareholders having rights rather than just voting agree (even though they are entitled to if they consider it to be in the interest of the crowd shareholders).
At face value, itās a huge conflict of interest and they should make attempts to demonstrate that the wish of the crowd the nominee represents is reflected by their vote.
I would assume its a takeover version rather than a creditor arrangement as that would probably imply regulatory capital issues and FCA problems
1 Like
I think itās a good thing for investors to a certain extent: my portfolios will be combined into one and hopefully I can trade a few of my CC investments on Seedrs secondary market.
However, I feel companies will be losing out as there will be no competition to lower the cost and the merged company can try to charge whatever they want, which means that in turn itās bad for investors because it will put off good quality companies that can raise from cheaper sources of capital (angel groups, etc).
I think the merged company will mostly get very poor quality companies that are desperate and willing to pay whatever fees and the Monzo / Revolut that will do a small part of the round for marketing purposes and thatās it.
Iām not a fan of Seedrs selling fees-
Seedrs āhey guys we understand that it was you who put all the money up front and took on all of the risk, but we would like a big fat cut of your profits please, you know for letting you sell the shares on our platformā
Me ābut isnāt that what the transaction fee is for? Selling the shares on your platform? Which I think is still quite large but hey hoā
Seedrs āyes the transaction fee is to cover the cost of using our platform and selling your shares using our secondary marketā
Me āso why do you also get 7.5% of MY profit? You didnāt put up 7.5% of the purchaseā
Seedrs ābecause, you know, greedā
5 Likes
Also it states that this 7.5% fee is an āadmin feeā that I agreed to when I bought the shares in the first instance.
However what if I bought the shares through Crowdcube, which had no such clause, surely Seedrs canāt then charge the 7.5% profit grab because I never signed their contract, they canāt just change my Crowdcube contract without my say so.
Seedrs āby the way you know that thing you never agreed to, itās ok Crowdcube agreed to it for you, didnāt they tell you?ā
Admin fee!
Seedrs finance clerk āooh this person made Ā£100 profit, Iāll just write 100 in my Excel sheet. That will be Ā£7.50ā
Clerk āblimey this person made Ā£1 million profit, Iāll just write 1,000,000 in my Excel sheet. Oh dear the strain of writing those extra 4 zeros was tough, weāll have to charge them Ā£75,000 to cover all that extra workā
1 Like
Letās not jump to the conclusions before both of the platforms have been merged but I see your point.
2 Likes
T and Cās when agreeing to be under CC nominee could be key. Seedrs have the right to flip to any nominee I think if they change (but of course investor not allowed to change nominee.). If they can flip CC Nominee to Seedrs structure and weasel in a carry that will be interesting
1 Like
Sounds like the merger is definitely not happening now: Seedrs Terminates Merger with Crowdcube, Announces New Funding Round
5 Likes
