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The First ISA Eligible Equity Crowdfunding Campaign




By Ryan Weeks on 7th May 2015


 

Another first for the UK equity crowdfunding sector, with SyndicateRoom now offering an ISA-eligible investment round.

 

Sandal – a publicly listed, home electronics business – is attempting to raise half a million pounds through equity crowdfunding. The money is being raised for the sake of “MiHome”, a home automation system in mould of British Gas’ “Hive” or Google’s “Nest”. MiHome allows users to control and monitor their home heating, lighting and appliances whilst on the move. The publicly listed company Sandal has boasted £3m a year in turnover in each of the last 3 years. To date, just shy of £140k has been raised via the SyndicateRoom platform.

 

The groundbreaking element of this round is of course its status as ISA eligible. We learned in last month’s Budget that a consultation was soon to be launched to determine whether or not to extend the list of ISA-able products to include a broader range of “debt and equity securities offered via crowd funding platforms”. But SyndicateRoom has now seized the initiative in becoming the first platform to purvey a crowdfunding ISA.

 

So how did they do it?

 

Sandal’s status as a listed company is the key – allowing SyndicateRoom investors to package up their investments into stocks and shares ISAs. Technically speaking, any publicly listed company that undertakes an equity crowdfund (such as the Seedrs-funded Chapel Down) could feasibly implement the necessary processes for facilitating ISA investment. But Sandal is the first to choose to deliver such an opportunity.  Sandal has a relationship with an investment advisory firm by the name of City & Merchant – which will provide a helping hand to investors that elect to tread the ISA path.

 

The Sandal round is also EIS eligible. Investors are offered a choice between investing under the shelter of the EIS tax wrapper or via an ISA. Given that EIS (and SEIS) provides immediate remuneration in the form of tax exemptions, SyndicateRoom in fact expects the impact of Sandal’s ISA-eligible status to be fairly modest. But it could lay an important foundation for the future of equity crowdfunding investment strategy.

 

Goncalo de Vasconcelos, Founder and CEO of the platform, offered comment:

 

“As a listed PLC, with real business success under its belt and an exciting new product with which to challenge the likes of Google and British Gas in the intriguing ‘Internet of Things’ arena, Sandal is an exciting company to have on SyndicateRoom.”

 

“The option for retail investors to place their shares inside an ISA is another innovative first in the market for SyndicateRoom, following the first and so far only UK crowdfunded IPO, last December.”

 

The “only” clause within the latter claim comes with a slight caveat. Seedrs hosted an IPO of its own in the form of a £1.9m Domaine Chanzy round in February, but the round was subsequently postponed. Regardless, the facts remain that SyndicateRoom is positioning itself at the forefront of crowdfunding innovation – with the fastest growth rate in the UK equity space thanks in large part to its “angel-led” model, the Mill Residential REIT listing, and now another industry first beneath its belt.  

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