Convertibles Come to Crowdfunding

Seedrs has become the first crowdfunding platform to offer convertible equity to its investors.

Future Ad Labs, a high growth advertising technology startup, is making history by launching the convertible investment round. “Convertibles” allow investors to invest in a startup now – with that investment translating into future shares, at a discount to the future valuation of that startup. The assumption is that when the startup comes to its next fundraising round – with a naturally higher valuation – investors in the earlier convertible will get more bang for their buck (more shares for their money) than others participating in the fundraise.

Investors will not know the business valuation at the time of investing – all they will know is that they will receive a significant discount when their investment converts into shares down the line. Seedrs takes its cue for the inventive new product from Silicon Valley, where convertibles are all the rage at present. Future Ad Labs is targeting a £300,000 fundraise through its convertible round. The discount on offer through the convertible is 15%.

Jeff Lynn, Co-Founder and CEO of the platform, commented:

“Offering the first ever crowd convertible is very significant news, not just for Seedrs but for the equity crowdfunding industry as a whole. Unlike some other recent crowdfunding products which appear to limit the potential upside for investors while still exposing them to all of the risks, convertibles allow investors a chance to actually increase their returns.”   

“Together, Future Ad Labs, its investors and Seedrs are proving that crowdfunding is coming of age.  We are all very excited about this development.” 

This is the second time Future Ad Labs has raised money through the Seedrs platform. The company received a £60,000 boost from 70 Seedrs investors in July 2012. Future Ad Labs has already secured the backing of some of Europe’s leading VC firms. You can learn more about the business and indeed the campaign by visiting the Seedrs website.

The convertible represents another intriguing development within the equity space – designed to add an extra layer of security to the crowdfunding process. We’ll soon know whether the new proposition resonates with Seedrs’ investor base.