Equity crowdfunding in the UK is slowly becoming a more mainstream way to finance your startup company or established business. Syndicate Room is one of the companies leading the charge in this area, having already helped companies raise nearly £20 million within their first two years of business.
In this podcast episode, we discuss what equity crowdfunding is, how entrepreneurs or investors can get involved, and why it’s going to change the financial world in the coming years. If you enjoyed the podcast, take a second to rate the show in iTunes!
Podcast Notes
– Equity crowdfunding refers to investing in early stage startups in exchange for shares or stocks in the company. In the USA, only accredited investors are able to invest through this model. In the UK, retail investors can invest as little as £10 pounds in early stage companies (up to 10% of their assets, not including their home).
– Syndicate Room has helped raise nearly £20 million worth of funds through their platform.
– UK companies are able to raise money on SyndicateRoom. They must be registered in the UK.
– Although equity crowdfunding is growing in awareness, it’s not yet mainstream. However, it’s growing in popularity.
– All deals on Syndicate Room are equity based and the platform tends to focus on growth capital. Even a Hollywood movie has been featured on and has raised money for the making of the film on the platform.
– The average funding round on Syndicate Room is about £600,000 pounds and tends to be growth capital, with a lead investor that is leading the funding round.
– Syndicate Room has also participated in real estate crowdfunding in the Mill Group Residential project, which is the first time that “a traditional IPO has been combined with crowdfunding … [it] is both a testament to Mill Group’s progressive approach and a demonstration of just how sophisticated crowdfunding has become.” – Read more.
– Investors should be aware of the illiquidity that comes with investing in a private company. They will not be able to exit as quickly. In addition, investor protections are extremely important. Online investors must have the same investor protections as professional investors. If you are not protected, then your investment may be heavily diluted in the future. With SyndicateRoom, the online investors receive the same terms as the lead investors.
– Over time, equity crowdfunding secondary markets may form to help improve liquidity. However it’s important that asymmetrical information is kept to a minimum.
– Syndicate Room is free for investors and companies that are raising money on the platform must pay a small fee. So far, the platform has a 90% success rate.
Tell us about your company!
Using equity crowdfunding as a route to secure growth capital or to participate in a startup’s upward surge is becoming a more popular financial tool among entrepreneurs and investors. We’d love to hear what kinds of companies listeners and readers are interested in equity crowdfunding! Leave a comment down below.
