Seedrs Review

Last post: Jun 30, 2014

A review of the equity crowdfunding platform, Seedrs.

Here at Choice Loans we have built up an extensive portfolio of crowd funding schemes for the benefit of our customers that are seeking to raise finance that they may have not been able to arrange through more conventional lenders such as banks and building societies.

Many of these schemes are peer-to-peer lending platforms but Seedrs is different as it is an online platform for small business start-ups to raise funds (seed capital) in exchange for giving the investor an equity stake in the business. Seedrs act as the nominee administrator (sole legal shareholder) for the ordinary shareholders and deal with setting up and administering each successful scheme.

Seedrs was formed in July 2012 and below we provide a review of their operation:

Who can raise finance?

If you are a new start up business seeking finance in exchange for giving investors an equity stake in your business you can register on the Seedrs online platform. It is acceptable for your business to be structured as a sole trader, partnership or limited company.

How much can you raise?

The maximum that you can normally raise is £150,000 although there is some flexibility in this respect. Investors can invest from as little as £10.

As this is an equity based form of investment there is no security and obviously no fixed repayment term.

What can the funds raised be used for?

As long as it is legal and ethical, there are no limitations as to what your new business start-up can use the monies for. You may, for instance, need to purchase stock if setting up a retail outlet or machinery if running a manufacturing business.

Are there any fees?

Whilst there is no interest payable to those providing you with the finance Seedrs charge business start-ups 7.5% of the amount raised.

Investors are charged the same percentage on any profit they may make should they sell their holding.

What is the process?

Through the website of Seedrs, you are able to set up your investment campaign and advertise for equity funding for your new business start-up. This can incorporate things like photos and short videos and details of how much you are looking for and the amount of equity you are prepared to give up.

Seedrs will carry out a review of your proposed campaign before it is made public to ensure that it is clear, fair and does not contain any misleading information.

The amount you are seeking must be fully funded in order for it to proceed and you have three months in which to arrange this. Should this be the case, Seedrs will provide assistance with any paperwork and help re-organize the capital structure of the business.  This will also include any legal documentation and the production of quarterly trading reports to each of your investors who will all hold ordinary shares in your business through Seedrs who will act as nominee administrator. Investors can invest via the website.

Once all the funds have been received and Seedrs has undertaken its legal due diligence etc. the funds will be released in exchange for the shares.

If you wish to make further inquiries, please telephone Choice Loans on 0845 1260350 and we will be happy to help.