A new face is about to appear on the UK’s equity crowdfunding scene.
The Ideas Factory is transitioning into a fully fledged equity crowdfunding platform by the name of Shadow Foundr. The Ideas Factory formerly operated as an Angel investor network – sourcing early stage equity investment opportunities for an exclusive community of sophisticated/high net worth investors. But the business recently submitted an application to the FCA to become authorised as a combined crowdfunding platform and private investor network. Whilst the regulator comes to a decision on that front, Shadow Foundr has been granted “appointed representative status” under Hypa Management LLP. The new venture’s founding team hails from The Ideas Factory and Hypa Management.
The Ideas Factory has been running for upwards of 5 years. Shadow Foundr will draw upon the experiences of those 5 years in order to attempt to position investors’ interests and compliance and the heart of its activities. Shadow Foundr representatives have suggested that companies which raise money on the platform will only be able to list after having secured “firm commitments that meet a significant proportion of the target fundraise amount”. In other words, Shadow Foundr will follow a model which closely mirrors that of the Angel-led platform SyndicateRoom, where unsophisticated investment always follows on from Angel backing. Initial investment commitments will be sourced from within the investor network formerly known as The Ideas Factory.
The Ideas Factory Angel network – which will henceforth be known as Shadow Foundr’s Private Investor Network (PIN) – will enjoy a privileged position within the platform. Entry into this inner circle will be “by invitation only”. The perks of such status include: full access to the platform’s investor relations team, invitations to special events and networking events, invitations to meet entrepreneurs in person and a “first look at all opportunities”. Such a package within the peer-to-peer lending space would surely draw cries of “cherry picking”. But equity crowdfunding, to be fair, is a different beast – and less sophisticated investors stand to potentially benefit from piggy-backing off of the experience of the Angels.
The Shadow Foundr transition stands as a ringing endorsement of the FCA and government’s treatment of equity crowdfunding in the UK. Supportive policy and generous tax allowances (such as the Enterprise Investment Scheme) have resulted in a year-to-date growth for the sector of 165.26%, according to the Liberum AltFi Volume Index UK. Equity crowdfunding in the US, on the other hand, seems to be moving in the opposite direction. The New York based investment crowdfunding platform Onevest recently rebranded as 1,000 Angels, citing inefficiencies in the JOBS Act as a key reason for the change.
The Shadow Foundr offering is not yet live, but a recent newsletter suggests that the team is “very close to finalizing” the platform. We’ll keep you posted.