It says on the page they wonât be providing any updates
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I am not sure about that based in Log In To Invest In Businesses Or Raise Startup Funding.
Seedrs investors will therefore not have some of the rights that are commonly included in Seedrs investments, such as (i) receiving updates from the Company via the Seedrs platform or (ii) pre-emption rights on future funding rounds.
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It is open to the âpublicâ but just to HNW and sophisticated investors.
This offer is available only to eligible sophisticated and high-net-worth investors due to the limited company information provided, and all investors must conduct their own due diligence before making an investment.
I think that based in the limited information has and the DD Seedrs can do it will be not open to the âgeneral publicâ
I dont understand this secondary share sale, and think itâs not a great sign for the company (I say this as an early investor).
@adam says he didnt approve it, but he / the board must have in some way:
- Either the selling shareholder is Class A, in which case all existing Class A holders would have had a pre-emption right. If thatâs the case, why didnât any existing shareholder want to buy this selling shareholders shares? Aside from the bad message this sends, by refusing to buy his shares, they are agreeing to him selling in the secondary market
- Or, that shareholder is Class B, in which case selling a portion of their shares (which is the case here) requires board approval (see section 7.2 of the shareholders agreement)
Generally speaking, providing such an important amount of liquidity on those shares is detrimental to all other B shareholders, given 1) it prevents us from selling our shares in the foreseeable future (0 liquidity) 2) it significantly weakens the message thatâs been put out there over the last few years that FT shares are in very high demand by retail shareholders, 3) it gives me 0 confidence that the existing shareholders are supportive.
Have you ever seen Revolut, Transferwise or Robinhood agree to seeing their shares be sold on secondary market outside of an institutional round? Me neither.
I hope I am wrong and misinterpreting whatâs going on here.
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I donât see how itâs different in principle to people selling shares to each other via this forum, itâs only ÂŁ600K worth. Thatâs a lot to an individual investor, but pretty insignificant in the bigger picture
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Shares sold on this forum are minimal in comparison to a ÂŁ600k share sale. 90% of the time itâs for a value thatâs less than ÂŁ5k. For the rest, refer back to my three points of concern above - none of these apply to shares sold on the forum.
Adam says he didnât approve it, but I took that to mean that he didnât approve Seedrs running it as a campaign. I donât think itâs ever been said that they would prevent shareholders selling their shares.
Regarding class A shares, previously theyâve said class A shares need to be converted to class B to sell them. doesnât this get around the Pre-emption thing?
Doesnât it says somewhere on the Seedrs page if they are class A or B?
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Fair enough if he meant just the campaign. And yes, he did say theyâd let people realize some liquidity - however that would be as part of an oversubscribed institutional round.
The three points still stand thoughâŠwhy would you approve such a massive liquidity dump? They are exposing themselves way more than is necessary.
Class A holders would have had the right to buy those shares outright. Happens all the time with tech startups.
Do pre emption rights apply to private sales? This is not Freetrade issuing shares, itâs a private sale. I donât think Having Class A shares entitles you to buy shares from a private individual
Yes they do. Again, Iâm happy to be proven wrong, but the shareholder agreement is pretty clear about this.
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Thatâs Class A shares, I bet these are Class B. Even if they were originally Class A Iâm sure they donât allow the sale of Class A and they get converted to Class B
It probably says somewhere in the Seedrs Pitch what class they are?
I didnât see anything on Seedrs, though may have missed it.
As mentioned in my first post, the Class B share sale also requires board approval (itâs not the entire holding and itâs not to a single transferee). See below.
Happy to continue this conversation via DM 
Thanks - all the points of concerns still apply
I donât necessarily disagree with your concerns, but I will say, this specific statement isnât accurate. The private sale of pre-ipo equity is very common amongst big tech companies, platforms like Equity Zen exist to enable it and have handled tens of thousands of transactions. I think your concern about the signal this sale going ahead on Seedrs sends is valid, especially in light of the sale requiring board approval, but the secondary sale of pre-ipo shares (valued at >1m) is very normal.
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To be honest this from Seedrs does make it sound like itâs possibly not approved by Freetrade, at least not yet
Seedrs is in contact with Freetrade regarding the transfer of shares from the selling shareholders to Seedrs. The transfer remains subject to further documentation being executed which will only occur on the closing of the campaign. If any of the required documentation is not completed, we will cancel the campaign and return funds to investors.
It kind of sounds a bit like they put up the campaign and hope Freetrade will approve it at the end
Like the crowdcube Klarna failed sale?
My thoughts:
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it temporarily prevents you from selling your shares at the current valuation - not the foreseeable future. How liquid have secondary sales on the forum ever been? Every investor is hesitant to buy a secondary sale at the last valuation until a new valuation or fundraise is announced, at which point everyone tries to grab them at the old valuation, but the seller has changed their mind. From the initial investment, we all knew that these shares were illiquid, this Seedrs campaign doesnât change anything.
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what marketing efforts have been made regarding this Seedrs round? Were any existing shareholders notified? I wasnât. They have been listed on Seedrs without much promotion (possibly because that promotion will cost the seller more), so not many people including existing Freetrade investors and customers know they are even there. They also carry very limited rights, so not the same as holding the original shares.
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Remember existing shareholders also just had the opportunity to buy in the last funding round - they would probably have committed all they can or were willing to at that point. On the surface, nothing significant has changed or been announced to improve the valuation since the crowdfunding round - existing shareholders appetite has probably not changed much, particularly considering it is not a Freetrade endorsed promotion and the shares carrying less rights.
Regarding the board approval, Iâm pretty sure that that will only happen at the end. The seller will need to present the board with a request to transfer and prove that they have willing buyers and indicate the particulars of those buyers. The Seedrs round will need to be completed first before the board can review and consider approving. After all that, this could still be rejected, like we have heard of other secondary sale attempts on the forum. Perhaps another reason the Seedrs pitch is not setting records.
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These are all fair statements. Seedrs are doing this the wrong way around though. It should not be specific to one class B shareholder to the detriment of all others that may want to sell. And the fact that they may not have approval from FT (if thatâs indeed the case), makes the situation even worse. For a business like FT that relies heavily on crowdfunding the implications of a failed secondary sale are not to be underestimated.
Are you classing the sale of shares worth 1% of the companies value as a liquidity dump?