At Crowdview our regular focus is on projects looking for funding through one of the main equity based platforms, but increasingly another opportunity has started to take centre stage – backing the actual platforms themselves. As our colleagues on AltFi News report “to date, investors have hungrily snapped up the chance to buy shares in the UK's leading equity crowdfunding platforms, when offered the opportunity. SyndicateRoom hosted a self-sustaining round in early May and raised £1.2m in just 33 hours. Crowdcube raised £1.2m in July the previous year in just 16 minutes, as part of a £5m round that included Balderton Capital.”
Now Seedrs has joined the party with the announcement yesterday that its raised £7.5m in a Series A round, and will soon launch a £2.5m crowdfunding campaign to cap the fundraise off. You can see the main AltFi news story on this at http://www.altfi.com/article/1234_seedrs_to_raise_10m_in_series_a.
Here on CrowdView we think this announcement is genuinely ground breaking, largely because of the identity of one of those investors – Neil Woodford. Again as AltFi News reported the fund raising was led by Woodford’s Patient Capital investment trust, WPCT. This is an investment trust run by renowned fund manager and currently has a market cap not far under £1 billion. WPCT has been accompanied in the Seedrs fund raise by Augmentum Capital – a leading VC firm in this space. These two very well-known firms have stumped up £7.5m between them, but the £10m round will be closed out with a £2.5m crowdfunding campaign on Seedrs itself. Apparently this injection of £10m will be used to ramp up marketing activities in both Europe and the UK, to bolster the platform itself, and to launch the platform's US operation – Seedrs acquired a US platform called Junction Investments back in November last year.
So why are we excited? Put simply Woodford is one of the best investors operating in the UK with a very long track record of backing new businesses. To understand this point consider Woodford’s background as lead manager at Henley based Invesco Perpetual and now his own business. Woodford’s long term strategy is a fascinating take on the old idea of barbell investing. This involves a double sided bet. Most money is invested in really boring blue chip names like massive tobacco companies that churn out a huge dividend yield. But a sizeable portion of the portfolio is also invested in younger businesses, many of them unlisted that could turn into tomorrow’s brand names or tech giants. Woodford has a long form in this space and has spent much of the last decade backing a host of university spin outs, largely organised around venture capital managers such as the IP Group, Imperial Innovations and Allied Minds. Woodford has patiently sat tight reaping huge rewards as many of these underlying tech based businesses have gone on to be worth hundreds of millions of pounds.
Woodford’s new management firm is focusing much of its effort on the alternative finance space and to date has backed the P2P Global Investments fund as well as putting £8 million into consumer lender Ratesetter in a deal announced earlier in the year.
Woodford’s backing is material and important – many in the City will be watching what Woodford does and we have no doubt that his backing alone is probably worth a few extra million on the valuation of the crowdfunding platform. We also like the fact that Seedrs will be making an aggressive play on the US market which we believe will be a huge opportunity over the next few years.
All in all this fund raising is a fantastic vote of confidence for one of the very first crowdfunding equity platforms. AltFi News reports that the deal values Seedrs at £30m on a fully-diluted, post-money basis. Crucially though this deal requires the platform to close out the offer by raising £2.5m via its own investors. We suspect that like similar fund raising pushes by its rivals, this on line campaign will close within a matter of days if not hours. Move fast!