Crowdcube & Seedrs Merger

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 aren’t the best quality.

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Any takes on the 60/40 split with Crowdcube ending with 60% and Seedrs with 40% once merged?

Haven’t 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?

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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 https://chacc.co.uk/startup-blog/top-crowdfunding-platforms/ that I hadn’t seen before. So not likely to be a competition issue.

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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.

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loads of crowdfunding websites that I hadn’t seen before

I think that’s exactly the point though. To use the example from earlier in the thread, I’d bet there are a bunch of Cola brands that you haven’t seen before too. If the two players that basically occupy all the public mindshare merge, the fact that there’s still a bunch of minnows that no-one’s heard of doesn’t fundamentally change the situation.

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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 aren’t that big in the grand scheme of things.

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I agree that it’s niche. The point still stands though, that within the equity crowdfunding sector it’s bad for competition. Whether the sector is well-known is a separate point.

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Financials released from Seedrs aren’t good, but in this light the merger makes a lot of sense.

There’s a good tweet below showing they’ll need around a 40% cost reduction to break even. I imagine they’ll use a introduce a combination of upfront fees and carry to increase revenue, as well as expand their secondary market offerings.

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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

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I think that it’s 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 it’s 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 year’s 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, it’s 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

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I think it’s 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 it’s 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 that’s it.

I’m not a fan of Seedrs selling fees-

Seedrs “hey 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 platform”

Me “but isn’t that what the transaction fee is for? Selling the shares on your platform? Which I think is still quite large but hey ho”

Seedrs “yes the transaction fee is to cover the cost of using our platform and selling your shares using our secondary market”

Me “so why do you also get 7.5% of MY profit? You didn’t put up 7.5% of the purchase”

Seedrs “because, you know, greed”

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Also it states that this 7.5% fee is an “admin fee” 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 can’t then charge the 7.5% profit grab because I never signed their contract, they can’t just change my Crowdcube contract without my say so.

Seedrs “by the way you know that thing you never agreed to, it’s ok Crowdcube agreed to it for you, didn’t they tell you?”

Admin fee!

Seedrs finance clerk “ooh this person made £100 profit, I’ll just write 100 in my Excel sheet. That will be £7.50”
Clerk “blimey this person made £1 million profit, I’ll just write 1,000,000 in my Excel sheet. Oh dear the strain of writing those extra 4 zeros was tough, we’ll have to charge them £75,000 to cover all that extra work”

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Let’s not jump to the conclusions before both of the platforms have been merged but I see your point.

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T and C’s 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

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