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Syndicate Room




7th May 2015


Type

Syndicate Room is an equity crowdfunding platform (as opposed to a P2P or peer to peer lender). As an equity crowdfunder, your investment gets you a share in the equity (ownership) of the business. This differs from P2P, which is debt funding for borrowers. Debt funders’ return on investment comes from what they lend, plus interest and is usually repaid in set instalments, while equity funders’ return comes through what their stake in the business is worth.

 

Key facts and figures

Launched: 2013

Minimum investment: £1000

Minimum term: N/A

Requirements to invest: Anyone over 18 who can prove they fit the criteria for a sophisticated investor OR a high net worth individual (income over £100 000 or assets held worth £250 000). Might be eligible for Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) tax benefits.

Cumulative volume invested: £37,755,471

Type of borrowers: Primarily start-ups and early stage businesses

Money invested in last 12 months: £27,689,704

Market share % over last 3 months according to Liberum AltFi Volume Index UK: 1.74%

(Figures are as of 28.09.15)

Returns: Rates and times vary depending on the success of the businesses you invest in. Expect to invest for 3-7 years before seeing significant returns.

 

Getting started

 

 

Getting money on the platform

 

When you choose to invest in a business, you enter your payment details in Syndicate Room’s payment system, “GoCardless”. If the business meets its target, you will be notified about the date the money will be taken from your account. No money will be taken if the business does nto reach its fundraising target.

 

Do investors get a choice in who or what they invest in?

 

Yes, options range from start-ups to well established companies across a number of sectors. Details of businesses are provided and investors are encouraged to do their own due diligence.

 

Investing your money

 

  • Select the company you wish to invest in, type in the amount you wish to invest and click invest.
  • You will be invited to read and accept the investment documentation, then go to the payment system.
  • If the company meets its minimum target, funds will be taken from your account.
  • Within a couple of weeks you receive share certificates from the company.
  • All investors get the same class of shares as the lead investor on the deal.

 

Monitoring your account

 

  • By logging on to your account you see your personal dashboard.
  • The dashboard includes share certificates for any companies you invest in, and you will also be able to track how much you have invested by sector, how much EIS and/or SEIS tax relief you have claimed through SR investments per tax year, as well as some other relevant information.

 

Understanding the risks

 

  • Investing in equity makes you a shareholder. A shareholder has partial ownership of a company and stands to profit should the company do well. However, the opposite is also true, so if the company fails investors can lose some, or all, of their investment.

 

Withdrawing money

 

  • According to Syndicate Room it generally takes between 3-7 years for a company to sink or swim (failures usually happen earlier than successes).
  • There are three main ways that an equity investor can see a return on their investment; dividends (where the company pays a percentage of their yearly profits to shareholders, but these are rare for start-ups), trade sale (where the company is sold to another company for a lump sum, which is divided proportionally between shareholders), and public offering (where the company is so successful that it is listed on a stock exchange and shareholders can sell their shares at a price determined by public demand).
  • Once money is invested it depends on the terms of the agreements as to when and how shares may be sold. 

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