Raising money via equity crowdfunding is attracting everyone from established venture capital-backed start-ups to former Dragon Kelly Hoppen (albeit unsuccessfully in her case). And it’s now also got the seal of approval from star fund manager Neil Woodford and a VC firm backed by the Rothschild family, who are backing Seedrs.
Woodford Patient Capital Trust and Augmentum Capital, which has investments in other fintech firms including Zopa, Interactive Investor and BullionVault, have put £7.5m between them into the equity crowdfunding platform. It’s looking to raise £10m in total from the Series A round at a valuation of £30m.
It’s a tad unusual for a start-up to admit its worth at this stage, but Seedrs, which somewhat randomly announced it was teaming up with Andy Murray recently, is looking to score the rest from the crowd on its own platform (but of course) so had to come clean.
The money, which takes the total raised by the alternative financier over the last six years to $22.8m (it went live in 2012), will be used to fund marketing and expansion in both its home market here and in Europe and the US. It comes after rival Crowdcube raised £5m last year from Balderton Capital and its own platform.
‘The market is still early in its development with many challenges to overcome,’ Augmentum managing partner Tim Levene said (not least that there have only been a couple of exits and the sector has yet to contend with any company failures, which will surely happen with time).
‘However, we believe Seedrs have the right blend of talent, vision, experience and rigour to ensure they become the leader in this exciting space.’
Meanwhile, Seedrs co-founder and CEO Jeff Lynn could hardly contain his excitement. ‘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 opportunity to be won, and decided that Seedrs is the one that’s going to win it,’ he gushed.
While there will no doubt be teething problems along the way, the potential of equity crowdfunding is hard to argue with. It facilitated just £84m of investment last year, but has been growing at an average of 410% for the last three years, according to Nesta. No wonder Woodford wants a slice of that pie.