Should Freetrade use Crowdcube or Seedrs for the next crowdfunding round?


#21

You’re right on your observation. And I think it’s in line with what I was trying to say.

According to the comments above crowdcube charges a 1.5% fee on the investment and seedrs charges a 7.5% fee on profits when one sells.

Example1:

Investment of £100 with future sale at £200

Crowdcube
£1.5 fee

Seedrs
£7.5 fee

Example 2:

Investment of £1000 with future sale at £4000

Crowdcube
£15 fee

Seedrs
£225 fee

Is this difference worth moving to seedrs just to have access to a secondary market?
I don’t think so.

As for the safety of our holdings I don’t know what to say.

Thanks for noticing that btw


(Andrew Clark) #22

I’ve invested in around 45 companies now via Crowdcube and Seedrs and I’d take Crowdcube any day of the week. I paid Seedrs 7.5% on exit and that was painful. In terms of due diligence, are people still upset about Sugru because I’ve lost plenty via Seedrs?


(Aris David) #23

As an example:

£10K investment 5x.

10 grand @1.5% fee = £150

40K profit @ 7.5% fee = £3K (pretty hefty)

Investing in a start-up is already risky, so why I should I give 7.5% of my profits to a firm that didn’t take any risk at all?

If a start-up goes bust, be it Crowdcube or Seedrs, you get nothing (let’s aside EIS loss relief for the sake of this discussion).


(Matthew) #24

Personally, I might not be a huge fan of the way that CC operates at times, but for the sake of keeping all of my Freetrade investments in a single place then I think that I’d prefer it this round was run via CC.

Matt


#25

Looks like I’m in the minority here, though still glad to have started the debate.


(Emma) #26

Don’t care really as long as I get to invest :woman_shrugging:


#27


(Andrew Clark) #28

Quite right. Both Seedrs and Crowdcube could be better at managing their stakeholders, longer term this might lead to them losing out to either each other or a new entrant. The lack of updates from some companies is shocking, how much time does it take to do a quarterly update?


(Kieran) #29

Probably an unpopular opinion but I believe the sole responsibility for due dilligence should be on the investor, much less so on the platform. Both crowdcube and seedrs are very high risk forms of investing anyway, but that is what leads to opportunities for big returns. As far as I can tell crowdcube provide plenty of ways to contact the entrepreneurs via email or telephone if you have further questions about the pitch, if you don’t like what you see, don’t invest in that company!

I’m not going to start blaming Freetrade if I make a poor investment on their platform!


(Luke Bebbington) #30

Agreed, most businesses are terrible at communication… It is one of the major reasons I won’t invest in a second round - if you won’t communicate with your investors then I struggle to see how you will manage your customers. Seedrs and Crowdcube are as bad as each other in managing this.

In saying that there are some great companies who put effort into communicating with investors and so far these companies have been my most successful.


#31

I wonder if you’re thinking of a company like this one :wink::+1:


#32

Personally I vote for free trade to facilitate crowd funding through their own platform without either crowd cube or seedrs but granted that’s easier said than done and far more important things for the team to be working in than a new compliance point. Just my thoughts. BTW I have investments in both other platforms


#33

I like this. But would it be possible?! What are the regulations? What about the visibility provided by a campaign in an external platform?


#34

I think in reality although monzo were able to do it on their platform I think (possibly maybe) they had crowdcube back them up on the process.


(Andrew Clark) #35

The reason companies use Crowdcube or Seedrs is to avoid having hundreds or thousands of shareholders with the administrative overhead that brings. Instead they deal with Seedrs or Crowdcube who manage those elements on the company’s behalf. I’d rather any spare admin or development cycles were spent on the main product to be honest.


#36


#37

On the other hand, you’d hope that Freetrade were really good and efficient at tracking shareholders :wink:


(Dave Smith) #38

My current star player Solar 350 removed their pitch from Crowdcube early in the campaign and set up their own. I invested directly with them. I did it over the phone and via email but now they have a platform with a couple of other companies on

https://350ppm.co.uk/investments/


(Ben) #39

I would like most of the funding to be restricted to those who had early faith. I am not an original 1sr round investor but we all know we get watered down even if it’s for great expansion. I think and hope that investors (I know bonus shares are a long way away!!) are rewarded at least by giving them option to retain their holding . Without us free trade wouldn’t be going anywhere. Can you offer all investors rights to buy say up to 4 times original investment and then second round 2 times to mop up remaining?


#40

Seedrs’ 7.5% fee on gains is analogous to hedge fund performance fees - they take a hefty cut from the substantial upside while investors are exposed to 100% of the downside!