Seedrs Vs Crowdcube

Hey @Lee, sorry for late reply! Anyway, I will definitely do a longer, more detailed blog post about this someday (it's quite a big topic; there's more to it than meets the eye), but here's a snippet of my personal thoughts on the "Crowdcube vs Seedrs" debate.

Crowdcube

pros:

Deal flow - Definitely the lion's share of companies raising, which is arguably the most important aspect of a crowdfunding platform. Some of my favourite investments are on CC: Cowboy, GoHenry, Freetrade, Patch plants, etc.

fees

N.B. dealflow product of first-mover advantage (CC was the first platform not only to launch, but to have a dedicated sales/campaigns team) and network effect (best companies raise on the platform is most popular, or where the best companies are/have raised). They also leverage their network well (e.g. Crowdcube have a mutual investor (Balderton) in Nutmeg, Thread, Carwow, etc).

cons:

Terms - variable; sometimes no pre-emption rights. Sometimes no transparency from investees (e.g. Curve, Nutmeg)

Lack of secondary market

Tech stack - This doesn't seem a big deal, but it could bite you. The most infamous example is that the site crashed ~30 mins into Freetrade's 4th round, so you would've paid ~20% more to invest in the end (because they closed early as a result, so you had to wait till round 5 to invest). The site has since been optimised, though.

Seedrs:

Pros:

Terms - e.g. Pre-emption rights by default (can be waived in exceptional circumstances)

Secondary market - Liquidity is a great; even institutions/HNWs don't often get this luxury. I will go into how the SM is bad for EIS, information and valuations (if dynamic pricing is introduced) more in a later blog post.

cons:

Fees - They charge a 7.5% fee on profits (carry). This can work out astronomically more expensive than crowdcube fees if your investments perform well, but does align platform interests with investors. They also charge a fee for SM use (~1% from memory?).

Dealflow - Historically relatively poor, but Improving (Allplants, Oval Money, Much Better Adventures, etc) - largely via 'poaching' Crowdcube clients.

Hi Lee, I would echo most of Admin's points. I like and use both platforms. I have an investment ratio of about 2:1 in favour of Crowdcube due to the "big ticket" investments.

I think the layout of the offering by CC is more user friendly and like their app also. I was pleased when they switched to electronics EIS/SEIS forms as wasn't keen on them being mailed separately.

With regards to Seedrs, their staff and founder Jeff are very active in the comms and seem to be very transparent. I think their comms system is more effective and allows for greater discussions with both investors and founders. I also like the SM feature.

I think they are both keen to expand in the EU so am keen to see how they progress.

What are your own thoughts/experiences on each of them?

Personally I don't agree with carry, so I have only used Crowdcube so far. Also Seedrs have only started doing pitch events in the last year or so. I always like to meet founders before I invest. Have started going to both, so never say never...

I use and enjoy both. Started with Crowdcube first and as such, all my folded businesses are on CC. My personal learning journey I guess, but also I think riskier businesses end up on CC more often than not. For this reason and for the better investor rights offered on Seedrs, I recommend my friends to start with Seedrs before looking at CC

I use both and I think Crowdcube is tailored for newbie millennial investors in mind while Seedrs was/is more tilted towards more matured and investors.

With regards investors protection I think Seedrs does better than Crowdcube in that respect.

BTW I am an investor in both platforms.

Hi, just found this blog and forum and think this is a good topic for comparison from an investors perspective and experiences, sorry to revive an old thread. I've been investing in ECF since 2014, and since then I've made all my investments on Seedrs and none on Crowdcube, which has probably meant I've missed some great opportunities.

In my opinion Seedrs just has better investor protections, although Crowdcube has made big improvements here since their introduction of the nominee. There are still some significant differences that I think leave an additional risk to investments on Crowdcube.

Firstly, Seedrs nominee has the shareholder rights secured by both the Articles of Association and a Shareholders Agreement which is a legal contract which requires unanimous agreement to change. Many Crowdcube shares don't have a shareholder agreement, and instead only have the protections in the Articles of Association, which doesn't offer the same amount of protection as its possible they may be changed with a majority vote, not requiring unanimous agreement. That leaves small shareholders exposed to risk, and even the crowdcube nominee if they don't hold a significant portion of the company.

Secondly, it's not clear if Crowdcube offers Tag Along rights, which Seedrs does. Tag Along rights mean that you have the right to sell your shares as part of any majority sale of the company, such as if the founders/management sell their shares. This is an important right as it may be possible for a buyout of a company where a majority steak is bought, allowing IP and assets to be absorbed by the new owners but leaving you with shares you now can't sell and with the new parent company having no incentive to give you an exit. I've never actually seen an example of this happening in ECF though, however you could see an example of where tag along rights would have applied in Crowdcubes own round last time, where the founders were allowed to sell a chunk of their own shares as part of the deal, giving them a partial exit while earlier investors were given no option to sell.

While its probably true that founders of the companies raising on these platforms would probably not want to act maliciously towards investors, there's risk that as a company grows VCs come onboard and management changes. In an investment in the "next Facebook" with billions at play I don't doubt someone might consider taking advantage of unprotected investors.

As for why Crowdcube gets the big names, this might also come down to not having to offer the same rights to investors.

The thing is, despite investing on ECF for 6 years now, I've really not seen many examples so far of investors being screwed by losing protections or not having tag along rights. I've also seen on some occasions Seedrs are not that effective at enforcing the rights, especially in relation to quaterly reporting to investors which is also a term of the shareholder agreement. Maybe other investors here have experienced something?

Seedrs's investment account is a big plus for me, as I don't have to deal with each individual company for any kind of payment. There was a price adjustment in one offer I was in with Crowdcube 5 weeks ago, and I'm still waiting for a 6-quid transfer. With Seedrs this type of adjustment happens in a day or two. Haven't had any exits with Crowdcube so far, but experience with Seedrs was seamless too.