Looks like both companies are now expanding into providing secondary transactions which might attract larger established private companies onto the platforms if investors want an exit. Seedrs has the first secondary offer in "safetonet" where £300k of secondary shares are being sold, they are also offering the option to transfer into the nominee and sell on the secondary market, which might be an option for smaller investors if the companies allow it. Crowdcube has announced a similar offer and they seem to be hoping to attract big and very established private companies.
Does anyone have any thoughts on this?
I think this is great! Regulation makes raising over >£6m expensive,etc so theres not much of an incentive for later stage companies to crowdfund (esp. When they can get VC money with less 'headaches'). I think secondary sales are a great way around this, and a must to grow crowdfunding beyond Seed-series C rounds. I look forward to being able to invest in more established private businesses, which for me has always been the dream/goal. A worry of mine is the transparency; it'll technically be the employees selling equity, so presumably they aren't allowed/dont know as much information as could be disclosed in a 'true' funding round. I hope that over time CC will work out this kink though. On another note, if the rumours of a crowdcube and seedrs merger are true, we could have a great product on our hands. CCs IPO-alternative and Seedrs' secondary market combined would make a force to be reckoned with in terms of liquidity in the private market. Some great opportunities could pop up for us as investors.
Yes good points, I hadn't considered that it might allow platforms to process larger transactions over 6m without companies being put off by regulation. Personally I would be interested in seeing a market for established, profitable, maybe even dividend paying private companies which might offer something different than the usual high risk high growth offerings normally found on the platforms.
I've read on Seedrs that they are requesting any company new to the platform to do a "secondary campaign" which looks to be effectively the same thing as what Crowdcube is proposing minus the buzzwords, so we might have to wait for more details about how exactly Crowdcube's offering will differ. Here's the Seedrs page I'm referring too :https://help.seedrs.com/en/articles/4108664-selling-shares-not-bought-on-seedrs-in-our-secondary-market
Do you know where that rumour about a merger has come from? I can't help but feel a little sceptical when they have such a different ethos, but I can see they are currently driving each others fees down from competition, so it might be an alright idea.
You took the words out of my mouth; I completely agree - high risk, high growth, 'strategically' loss making companies have their appeal, but I would love to see established, cash-generative private businesses crowdfund. Brompton (bicycles) springs to mind for me, though i'm sure there's dozens more in my head i can't recall at the moment. Any that you'd love to see in particular?
Yeah, it will definitely be interesting to see how Seedrs' product and Crowdcube's liquidity products compare. As you said, safetonet is a secondary campaign, and it works quite well at first glance - information rights, relatively transparent campaign, etc. A nice cherry on the cake is that they've noted who we are buying the equity from (e.g. in this case, a co-founder), which is must-have information in my view (e.g. a founder selling too large a stake is a massive red flag). If all secondary campaigns will be like this, i will be quite happy.
I'll be honest - I really don't know! People are saying it came from a seedrs/CC employee, but without any names, I obviously can't be certain. I first caught wind of the rumour through a network of investors I keep contact with, I was prepared to dismiss it but was intrigued to have found out whilst digging deeper that James Hurley of the financial times had heard similar things. I've been trying to make sense of it since to no avail, so thought i'd just leave it in the blog as a rumour. I absolutely do not want to portray this rumour as a certainty, and would therefore definitely encourage a healthy amount of skepticism.
I didn't really have any specific companies in mind, but what I would be interested in is anything established and stable if it looked like a good bet for long term dividend payments. I guess an example would be something like JCB. I would hope that the price of private equity would be cheaper to reflect the lack of liquidity and therefore potentially offer a better dividend yield than public companies. It would need to offer very high dividends to balance the risk of potentially not being able to exit.
So the rumours turned out to be true and both platforms are going to merge. Curious to see the final terms and more insights on the financials of the platforms that led to the valuation split agreed upon. I would somehow have preferred both platforms to be independent and raise further funding on their respective platforms. Having invested on both, I see Seedrs more advanced technologically and Crowdcube stronger in marketing and thus seemingly being able to attract bigger raises. [1] https://twitter.com/jameshurley/status/1313029230217891841 [2] https://twitter.com/jeffseedrs/status/1313034550583480320