After a month of mulling it over, a group of German equity crowdfunders have turned down the chance to double their money within just two years of investing.
Between June and September of 2012, 446 investors channeled €100,000 into the Companisto platform by way of a self-sustaining fundraising round. In early November, some 2 years later, those investors were suddenly faced with the option of doubling the value of their investment. An outfit by the name of Lake of Constance Ventures GmbH offered to buy all of the shares from the Companisto pitch for €200,000. The stage was set: if 75% of the investors voted in favour of a sale – the offer would be accepted.
In a sector that has been largely starved of returns – due in no small part to the youthfulness of the majority of equity crowdfunding investments – you might have imagined that the Companisto investors would jump at the chance to exit. Not so. Of those investors that participated in the vote (73.18%), 68.11% declined the offer – choosing instead to hold onto their shares in Companisto.
Investors had a single vote for every €5 that they had tied up in the pitch. But interests ultimately proved to be pretty well aligned across the board – regardless of the size of the investment held. The percentage of no votes (68.11%) ended up being remarkably similar to the percentage of individuals that voted to decline the offer (65.06%). In other words, those holding a great many shares voted similarly to those holding very few.
Of the Companists (the platform's investors) that voted, 15.35% indicated that they would be interested in selling their shares individually. Unfortunately for them, these kinds of micro-transactions did not suit LoC Ventures GmbH. The administrative and financial burden of buying a number of small shareholdings would have reportedly been equal to those associated with the full €200,000 purchase.
This fascinating turn of events suggests first and foremost that the Compaisto investors have a great deal of confidence in the platform’s direction and in its capacity to perform. The number 1 reason for holding onto the shares is, clearly, to await a sweeter deal at a later date. Whether or not that proves to be the right call – only time will tell.
Ironically, the LoC advance may in fact have strengthened the Companists’ resolve to hang onto their shares. After all, what could be a better indicator that a business is poised for substantial growth than the (attempted) arrival of institutional money?
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.