By Daniel Lanyon on Thursday 2 December 2021
The deal follows the failed merger of Seedrs and Crowcube following intervention from the UK regulator earlier this year.
UK crowdfunding platform Seedrs has been acquired by Republic, a US fintech providing retail investors with access to private debt, equity and crypto, for $100m.
Republic’s acquisition of Seedrs, which is still subject to regulatory approval, will position the new entity as the first global fintech offering access to private assets.
“We knew international expansion was necessary to achieve cross-bordered participation. In working with Seedrs, we have admired their technological capabilities, the strength of their team and their strong presence in the UK and soon Europe. We anticipate further developing the strengths of both companies from retail, secondaries, crypto, and communities to create a clear industry leader,” said Kendrick Nguyen, Republic’s founder & CEO.
Among those celebrating the deal will tennis player Andy Murray who worked with Seedrs in an 'advisory' role in 2017 as well as c.4,500 private investors who have participated in its own crowdfund over the years. This started in 2013 when it raised £2.1m from 850 investors who will be seeing c.2-3x their money back.
Back then the plan was to use the funds to expand into Europe, which didn't materialise owing to a complex regulation outside of the UK that curtailed crowdfunding's growth on the continent until recently.
It also comes just a week after Crowdcube raised £10m from another US fintech firm Circle, seeing its valuation increase by 57 per cent to £140m since its last funding round in 2018, to fund a European expansion strategy.
The deal also comes less than a year after a botched merger between Seedrs and Crowdcube. The two firms were planning to combine forces in order to ensure 'survival' in their words following rising pressure during the pandemic accompanied by widening losses.
While Seedrs has seen nearly £1.5bn invested on its platform over the 10 years it has also seen revenue jump in the past few years as funding for startups has soared, particularly among fintech companies. Losses in 2020 fell to £4.33 in 2020 compared to £4.7m in 2019.
The Competition and Markets Authority (CMA) said in March 2021 that the proposed merger “may be expected to result in a substantial lessening of competition (SLC) within the supply of equity crowdfunding platforms to SMEs and investors in the UK.”
Seedrs’ leadership team will remain in place to continue to grow the UK business and deliver on Republic’s European expansion plans.
Investment firm Davidson Kempner will become a shareholder of Republic through their acquisition of Seedrs shares from Schroder UK Public Private Trust, Augmentum Fintech and Omnis Income & Growth Fund in November 2021.
These shares represent in aggregate approximately a 30 per cent stake in Seedrs.
Seedrs’ ambition has always been to build a global private equity marketplace, Jeff Kelisky, CEO of Seedrs says.
“This transaction is a natural development of our partnership with Republic to achieve and go beyond that ambition. We share a similar culture, a common goal, and a commitment to the strategic opportunities that lie ahead. We have great admiration for the teams at Republic, and together we can accelerate our plans to create a powerful global private investment marketplace that will transform the finance ecosystem and the communities they serve,” he said.