January 20, 2015

Equity Funding with Seedrs

More and more companies are turning to crowdfunding as a way to get their business going. Pitching to big investors can be daunting, or perhaps you just need a little cashflow to get the ball rolling. The simplicity of platforms such as Kickstarter, Indiegogo and Seedrs are attracting a new wave of a hardware products from aspiring inventors and entrepreneurs.

Using crowdfunding is a great way to test the market. Your amazing business idea might not seem so great to others. If you are successful in raising funds, the chances are you have a good product.

However, all these platforms are slightly different, and their value to your product or company can vary depending on what is on offer. Kickstarter allows you to keep 100% of the company, and you offer rewards to the backers, whereas Indigogo offers flexible funding so you can keep the money you raise even if you don’t reach your target. Seedrs has a slightly different model of equity crowdfunding. We’ve had a look at how they do things differently.


Seedrs is a crowdfunding platform similar to Kickstarter, but instead of the investors receiving various levels of products, they get equity in the company. Equity crowdfunding provides investors with the chance to own a portion of the company they believe in, and for the founders, in addition to funding, a wealth of knowledge and support from their investors.


What are the Benefits of Seedrs for my company?

  • Many early-stage companies can struggle to get that initial investment needed. Crowdfunding platforms such as Seedrs means that you can raise a minimum investment of £10 each from friends, family and a wider pool of investors (No excuses Mum!)
  • When you’re looking to raise funds in later rounds, proving a successful crowdfunding campaign can be very appealing to investors
  • Seedrs do not screen the applications based on whether they think the company and product will succeed or not, they let the crowd decide that. The only vetting that’s done is from an FCA compliance standpoint.
  • Starting a new business takes up a lot of time! To help control the administration and legal paperwork, Seedrs uses a nominee structure which means you deal direct with Seedrs, who act on behalf of the investor group. You can still reach out to their investors for advice and connections, but Seedrs manages the legalities.
  • Instead of going to multiple pitching events, the platform can allow you to display images, videos, descriptions and Q&A to potential investors. This again saves you valuable time needed for setting up your business.
  • Seedrs provides marketing guidance for all startup campaigns. Their approach is to really support your campaign as far as possible to help you succeed going forward.



What are the benefits to Investors?

  • The nominee structure gives the investor much more robust legal protection than most crowdfunding investors would normally be able to obtain for their level of investment. As nominee, Seedrs enters into a subscription/investment agreement with the company and acts to represent Investor rights under that agreement.
  • Investors delegate their responsibilities to Seedrs who will monitor and take legal actions (i.e voting) in respect of their investments. Seedrs ensures the Investors are kept updated.
  • Seedrs takes an ‘all or nothing’ approach to fundraising. The crowd (all the individual investors) decide as if the company has an attractive idea or product and the success of the campaign is based on this and the materials provided by the startup. If a company doesn’t raise it’s target, it doesn’t get funded.
  • In it’s role as nominee, Seedrs is also party to later stage funding talks with the company, and ensures that Investors have the chance to exercise pre-emption right (i.e follow their money)


To find out more about how you can raise money or invest using Crowdfunding contact talk@ihorizon.co.uk


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