When I started reading this thread I was in favour of crowdcube but now Iām thinking how is easy it is for us little guys to get screwed over when big investors come onboard without the proper protections. I think itās worth the exit fee on Seedrs to avoid any shenanigans.
EDIT: Being selfish here but if freetrade did R4 on Seedrs and then subsequent rounds back on crowdcube would that serve well enough to secure anti dilution protection, tag along and drag along for everyone involved in the round for the lifetime of the investment? Youād only have to pay the Seedrs fee on R4 money then.
The rights would only be applied to the shares bought on Seedrs. (its applied to each individual share, rather than each investor) Itās possible that Freetrade could offer the same rights on future rounds done on Crowdcube but you would need to check the contract when they do the round. I didnāt have a chance to see the contract on previous Crowdcube rounds, they might have given tag-along rights but they definitely didnāt give pre-emption rights to smaller shareholders. You can see under the equity tab of their last raise, only people who invested over Ā£20,000 got āA Ordinaryā shares with preemption rights: https://www.crowdcube.com/companies/freetrade-2/pitches/b3M2Ql
If Freetrade chooses to do another round on Crowdcube, it might be worth asking about tag-along as I canāt find any information about it.
Also, the article that gl196 posted does point out something to consider with Seedrs, which is that under the nominee structure they on occasion waive or negotiate terms on behalf of the shares held in the nominee. Sometimes investors arenāt happy with the deals or agreements, for example waiving preemption rights when a company can only raise large rounds under the condition that they are waived. This might lead to a situation where Seedrs chooses between waiving the rights to allow future growth, or keeping the rights but stunting or stopping growth of the company. Itās worth pointing out that waiving the preemption rights is done on a case by case basis, and is not a permanent removal. Seeing as they make 7.5% on profitable exit, its always in their interest to do what they consider to allow the best returns for investors. Iām not sure how Syndicate room works, but they offer the same protections as the lead investor, whoās always an experienced angel or VC. I guess that any control over rights follows the decisions made by the lead investor in this case, which again is likely to be what they consider to give the best return.
Since I started this thread, let me be the first to say ātold you so!ā Worked fine for me, but jeez guys, what a way to treat your champions. Terrible.
I think it would be definitely worth speaking to Monzo and finding out more about how they ran their last crowdfunding round in their own app. Not so much to get them to run it (because it would be a bit unfair to limit investment to Monzo users only!) but because I definitely think they would be able to give good advice on how to build a solution through the Freetrade app.
I accidentally invested 4 times because CC kept telling me either I was offline or that my investment hadnāt worked. I eventually gave up thinking I hadnāt invested because CC obviously couldnāt cope with the demand but then I received 4 emails from FT thanking me for my investments.
