Seedrs has launched a new programme to introduce financial intermediaries and their clients to the equity crowdfunding space; offering a cost-effective, digital alternative to the discretionary EIS funds and offline deals that have historically been the first port of call for wealthy individuals looking for exposure to the early stage equity asset class.
In the last 18 months, Seedrs has seen an increasing level of interest from financial intermediaries looking for new opportunities for their clients who want to build their growth investment portfolios but are conscious of their clients paying excessive management fees. Innovative product features, such as digital tax certificates, real time portfolio performance and a secondary market, as well as recent commercial partnerships with RBS, Fidor bank and The Law Society, has drawn significant interest in Seedrs from the intermediary community.
Some 45 per cent of angels interviewed by the UKBAA about their early stage equity investments reported high growth portfolios and 63.9 per cent showed high or reasonable growth. As a result, equity crowdfunding has become appealing to high-net-worth individuals because it offers access to a previously exclusive asset class with the potential of serious capital growth, diversification opportunities and the chance to support innovation.
Seedrs’ most recent Portfolio Update highlights just how lucrative early stage equity can be. Landmark analysis shows that on a fair value basis, investing through Seedrs as of 30 September 2016 had produced better annualised rates of return (IRRs) than most other asset classes with platform-wide IRR increasing from 14.44 per cent to 49.1 per cent when impacts of SEIS and EIS tax reliefs are taken into account.
A portfolio of EIS and SEIS qualifying investments on Seedrs can offer investors an alternative to discretionary managed EIS and SEIS funds.
Under the new programme, Seedrs offers intermediaries a non-advised solution for their sophisticated and HNW clients who are looking to build and manage their own portfolio of S/EIS qualifying investments, with the platform handling all legal and tax admin online with no ongoing management fees.
High-growth portfolio companies on Seedrs include digital banking alternative Revolut (recently completed a USD66 million Series B round), English wine company Chapel Down (ISDX quoted), and accountancy software business FreeAgent (listed on AIM). Furthermore beauty on demand startup blow LTD recently received GBP7.5 million from Debenhams offering Seedrs investors an exit opportunity after just one year at 3x their purchase share price, and on a fair value basis, investors who invested in peer-to-peer mortgage lender Landbay’s first round through Seedrs have seen a 73.05 per cent non-tax-adjusted IRR and a 139.27 per cent tax-adjusted basis after fees.
Over GBP3.6 billionn was invested into 1,203 equity deals in the UK in 2016, of which 23 per cent of all equity investment was done through equity crowdfunding platforms. Seedrs completed 11 per cent of those deals, making it the most active investor in UK private companies. The investment platform has now funded over 540 deals and had more than GBP280 million invested into campaigns on the platform.
Adam Reeve, Investors Manager at Seedrs, says: “Investors and advisers are more conscious than ever about fees eroding portfolio returns, and achieving growth. Self-directed execution-only platforms for traditional asset classes, such as listed equities and bonds, have existed for many years and are a common route for sophisticated investors who wish to construct their own portfolios, without paying significant management fees. Previously there has been little or no equivalent for private equities, particularly seed and venture investing with only structured, managed products provided only to HNW investors. Seedrs offers this service.”
Thomas Davies, Chief Investment Officer at Seedrs, says: “Equity crowdfunding has become increasingly interesting to accountants, brokers and financial consultants. The Seedrs nominee structure gives advisers the peace of mind that their clients are investing on the same terms as professional VC firms, receiving full voting rights, often pre-emption rights, consent rights and tag along provisions to protect minority shareholder rights. Furthermore, investors can get as involved as they like with businesses, support great ideas as a mentor, beta tester, customer and contribute towards innovation, progress, economic growth and job creation across Europe.”
Yogesh Agarwal. Director of RightCue Consulting, says: “RightCue is proud to be partnering with Seedrs in promoting the entrepreneurial spirit of the UK business community, offering clients a range of exciting investment opportunities as well as other benefits. Seedrs is an attractive proposition for our clients because they offer access to continuous deal flow of tax eligible early stage businesses, on a simple and efficient platform, without the ongoing fees. Our clients only pay a fee when they realise profit on an investment. In addition to this, the launch of the Seedrs secondary market also means clients have another potential exit route, which is vital for early stage investing”