Seedrs started out as an MBA project for founders Jeff Lynn and Carlos Silva at The University of Oxford’s Saïd Business School. In 2012, they became the first equity crowdfunding platform to gain FCA accreditation and subsequently launched to the public in July of that year. In 2015, tennis player Andy Murray joined Seedrs’ advisory board after having previously used the platform to invest himself. Seedrs then became the first equity crowdfunding platform to host an IPO, when cloud-based accounting software FreeAgent chose to list on AIM in November 2016. In another first, Seedrs became the first equity crowdfunding platform to launch its own secondary share market, allowing investors to buy and sell shares in unlisted companies in June 2017.
In 2020, Seedrs oversaw 265 total funded deals with £293m invested into campaigns, hitting the milestone of £1 billion invested through their platform on Christmas Day.
Seedrs will provide you with an investment associate responsible for handling the day-to-day needs of your campaign, supporting you throughout the process, and answering any questions you may have. While your investment associate is there to provide you with guidance and support, you will need to do most of the work promoting and managing your campaign for it to be successful.
Seedrs also act as a nominee for the underlying investors in your campaign. Seedrs and its nominee entity will be parties to the shareholder and subscription agreements and will also vote the crowd investors’ shares on their behalf. This system relieves you from having to send notices and solicit approvals from a multitude of investors. While you can still engage with your investors on a substantive level, the administrative work is reduced to a single entity.
Prior to commencing your raise, Seedrs will provide you with an equity term sheet. It is designed as a summary of the investment structure and contractual agreements including: the nominee structure, required due diligence, key terms of the contract, and the documentation used on their end.
Once your campaign has been launched, your campaign page will include a personalised dashboard containing key information and metrics about your live campaign as well as reminders for the steps you need to take to optimally manage and market your campaign. You will also have access to the Seedrs academy which offers a range of tools and resources to help you run a successful crowdfund.
In exchange for their services, Seedrs uses the following fee structure: a success fee of 6% of all funds raised for hosting your campaign; a completion fee of £2,500 (excl. VAT) which covers administrative work undertaken on completing a campaign; and a payment processing fee to cover fees levied by Seedrs’ third-party payment processor (on average between 0.6% and 1.2% for most businesses).
Seedrs has three key criteria that businesses must meet to be eligible for a crowdfunding campaign on their platform:
1. The business must be based full-time in the UK, EU, EEA or Switzerland.
2. The target raise should be over £/€50,000.
3. The size of your community, the user/customer base and amount you pre-committed should be appropriate for the amount you would like to raise.
Seedrs will consider other factors when reviewing your application, but these criteria must be met at a minimum.
When applying to raise on Seedrs, their in-house algorithm will determine your initial eligibility from the key information you will be asked to provide about your business. If you successfully pass this stage, you will be provided with an application that will go through to the Entrepreneur team. This application form takes approximately five minutes to complete, you will be asked to provide further details about your business, industry, website, valuation, and plans for your campaign.
In order to conduct due diligence on their end, Seedrs will need the details of a few fixed things: basic company details, issued share capital, company debt, company directors, and intellectual property.
To create a complete campaign page, you will need to go through the following steps:
Seedrs will need to ensure that your campaign is “fair, clear, and not misleading”. This, therefore, means that they might ask for evidence to back up any factual statements. A third-party source of information may be required to verify that certain statements are correct. This may include statements regarding previous funding, contracts, market trends, performance data, testimonials, historical performance, competitors, projections, and so on.
Once your campaign has been approved by Seedrs, you will be able to launch your campaign privately. When the campaign is sent live in private, it is only accessible to the few that are sent the campaign page directly. Those who receive the private campaign will have the opportunity to invest before everyone else. You are able to host your campaign privately for a maximum of 14 days before it goes public.
Once your campaign is live, it is your responsibility to ensure the correct handling of investors’ personal data. You must follow all the data protection and e-privacy laws that apply to your use of this data.
Conversely, all your investors will need to pass Know Your Customer (KYC) checks for the investment to be approved. Seedrs implements the KYC checks to ensure there is no money laundering activity on Seedrs. Most investors will be able to pass KYC automatically by inputting their details, however, some may require a manual check, in which they will be asked to directly send supporting evidence to Seedrs.
Any Seedrs investor that views your campaign can ask you questions in the Discussion Forum. Potential investors can ask questions about your business or request further documentation, such as business plans or financial information, that is not available in the Documents tab of your campaign page. You will be notified of each new question or document request by email.
It is worth noting that offline investments provided to the company outside of the Seedrs platform can generally be reflected in the campaign raise provided it is part of the same funding round. For the offline investment to be considered as part of the funding round, it needs to be:
1. On the same economic terms as Seedrs investors
2. A cash investment
3. Coming into the company around the same time as Seedrs investors
For the investment to be on the same economic terms as Seedrs investors, offline investors must pay the same price per share; receive the same class of shares; and be exposed to the same risks.
Once your campaign comes to a close, the Seedrs team will need to go through some final checks with you. This will involve conducting a brief legal due diligence process with you, to ensure that your company has been set up properly; they will also ask you to agree to a subscription agreement and sign other related documentation; and finally, they will transfer you your funds, after having deducted their fee.
Raising money through crowdfunding is much more difficult than many imagine it to be and while the Seedrs platform and their team can help, you will need to commit a lot of time and energy to ensure a successful crowdfunding campaign. You can read about how to succeed at Crowdfunding on our Crowdfunding Hub here.
Seedrs operates on an all-or-nothing basis. If your campaign does not reach its target amount, all the money you have raised thus far will be refunded to investors. Seedrs recently changed its policy regarding the time limit for the campaign meaning that while campaigns launched publicly before 1st July 2021 have a 40-day time limit to reach the full target amount, campaigns launched after this date will only have a 30-day window.
If your campaign does reach 100% of its target, it will go into overfunding. The total equity offered will proportionally increase from its initial amount as further investment is made. When you close the campaign, you have the choice to accept as much or as little overfunding as you wish.
After your campaign has finished, you will need to work with Seedrs to finalise all documentation and complete all legal requirements. You will then be set up with a post-investment shareholder portal which provides you with details of your history on Seedrs along with an “Updates” tab for investors to receive updates from you and a “Discussion” forum where they can ask any further questions.
Finally, you can allow the shares in your business to be traded on Seedrs’ secondary market. As Seedrs acts as the nominee for the underlying investors, they can sell their shares without affecting the business at all. Seedrs also provides the platform for the shares to be listed and handles all the documentation and admin so in practice, your business won’t be impacted.
Thinking of including a Seedrs crowdfunding campaign in your investment strategy? Check out more tips and insight in our Crowdfunding Hub.
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