Writing exclusively for the Centre for Entrepreneurs, Jeff Lynn (founder & CEO of Seedrs) comments on the crowdfunding platform’s latest funding round.
On 30 July, London-based equity crowdfunding platform Seedrs announced a £10 million fundraising round led by Woodford Patient Capital Trust (WPCT) and Augmentum Capital.
This is the largest round ever raised by a European crowdfunding platform, but more importantly, it marks an important milestone in the evolution of equity crowdfunding into an increasingly global phenomenon. For one of the main purposes of the round is to allow us to expand our work in Europe significantly while also driving our launch into the United States.
When we started Seedrs, our vision was to build an equity crowdfunding platform that would allow early-stage businesses with global aspirations to raise capital from an international audience. Cross border investment of any type is not a trivial thing, and the ecosystem of early-stage and startup finance has been particularly slow to adapt to globalisation.
But we believe international borders are largely arbitrary in an online world, and we see a huge opportunity in disrupting the traditional, pre-internet model of investing by making it easier to discover opportunities around the world and more efficient to close deals, and to create enhanced, more mutually-beneficial relationships between businesses and their investors.
We’ve always loved the idea of a bright young German entrepreneur with a hot idea raising capital from (amongst others) an angel investor in Singapore, a customer in Brazil, a supplier in the U.S. and a team member in India. Modern startups have global value chains, and we think that their capital structures should also become increasingly international.
In fact, a recent report by Compass notes that startup ecosystems have become more interconnected and international, with 37% of all funding rounds in the top 20 ecosystems having at least one investor from another ecosystem, and 27% of all funding rounds having at least one investor from abroad.
In our first step towards internationalisation, Seedrs became the first pan-European equity crowdfunding platform in November 2013 when we opened up to investors and entrepreneurs throughout Europe.
Since our initial European expansion, we’ve seen tremendous appetite from investors outside of the UK and similar interest in investing outside of their local ecosystem – with 35% of new users coming from abroad – and have completed investments in businesses in seven countries.
Now, with capital from WPCT (which is managed by star fund manager Neil Woodford) and Augmentum (which is backed by RIT Capital Partners, which Lord Rothschild chairs and in which the Rothschild family are substantial shareholders), we will be able to significantly expand our work in Europe. We will also be able to launch in the United States following our acquisition of California-based Junction Investments, Inc., in late 2014.
We are absolutely thrilled to have Woodford and Augmentum leading this investment round. The greatest fund manager of our time and the greatest financial family in history have looked at the equity crowdfunding space, decided that there is a huge global opportunity to be won, and decided that Seedrs is the one that’s going to win it. We are honoured to have both investors on board, we look forward to working with them as we continue to scale.
There is an immense amount of opportunity in Europe and the U.S. with 25% of the top 12 global startup ecosystems being in Europe, and the top 4 within the U.S. And a recent GP Bullhound report “European Unicorns: Do They Have Legs?” shows that over the last twelve months there were eight new unicorns (tech companies valued over $1 billion) in the UK and 13 Europe-wide. This compares with 22 new unicorns in the U.S. during the same period – meaning that the long-standing gap between Europe and the U.S. is narrowing substantially.
I believe that Seedrs is well on its way to funding hundreds of millions of pounds into thousands of businesses every year, transforming the way that investors think about allocating their capital, and how businesses think about their approach to finance. This is just the beginning of building a global marketplace.