By Ryan Weeks on Thursday 17 November 2016
Equity crowdfunder SyndicateRoom launches new offering to allow investors to participate in AIM raises.
SyndicateRoom, the Angel-led equity crowdfunding platform, has launched a new product by the name of the WatchList. As a complement to its existing offering, the newly launched WatchList will allow the platform’s investors access to a vetted selection of placements on the AIM.
Each company on the WatchList will have been endorsed by a “Watcher” – an experienced investment professional with an intimate knowledge of the business. SyndicateRoom members can pledge capital to these companies, pre-fundraise, at a discount of their choosing. SyndicateRoom then aggregates the subsequent demand – providing a potential injection of capital for fundraising companies and favourable terms for its investor base.
SyndicateRoom says that an equity gap exists for UK small-cap companies, with investment banks and UK brokers increasingly focusing their energies elsewhere, resulting in a lack of small-cap company research upon which to base investment decisions. The WatchList is seen by the platform as a fix for this information gap. The new offering will provide investors financials, summaries, investment theses and track records for fundraising companies, and of course the assurance of following a professional investor into battle. Information of this kind is readily available for AIM listed companies, meaning that there is minimal cost – both in terms of time and money – involved in advertising fundraises to SyndicateRoom investors.
Speaking with AltFi, Tom Hinton (pictured above), head of capital markets at SyndicateRoom, said that you have to incentivise people to buy newly listed shares on an exchange like AIM – otherwise they’ll simply buy existing shares on the aftermarket. It’s largely for this reason that offering shares at a discount might make sense for fundraising companies. Beyond that, having certainty of private investor demand (at a specified price) is valuable for fundraisers, and pledges made to featured WatchList companies by SyndicateRoom investors will be binding.
“This innovative approach both responds to a growing appetite for early stage investing – and provides companies with flexibility around their capital raising requirements. WatchList puts our members in the driving seat and gives our members access to differentiated opportunities. It also provides companies with efficient access to an incremental source of patient risk capital to support their development,” said Hinton. “More diverse channels of investment mean that more entrepreneurs can have the chance to secure the funding they need to grow their companies.”
The WatchList already has a number of companies listed, including Image Scan, AB Dynamics, Zytronic and Fulcrum Utility Services.
Equity crowdfunders in the UK have repeatedly flirted with the public exchanges over the course of the past few years. Crowdcube raised £6m in a round led by leading UK stockbroker and corporate advisor Numis in July 2015, with the specified intention of opening up the IPO market to individual investors. Seedrs effectively co-hosted the public listing of French winemaker Domaine Chanzy in February 2015, in addition to hosting a fundraising round for ICAP Securities & Derivatives Exchange-listed Chapel Down in late 2014.
But Hinton says that AIM is the sweet spot for equity crowdfunding investors, calling it the “logical point for the two points to collide”.