Crowdcube and Seedrs agree terms for a merger to create one of the world’s largest private equity marketplaces to take on the UK’s £12bn equity funding market.
1,500 companies have raised with Crowdcube and Seedrs with £2 billion invested into campaigns.
The combined company will make it easier, more affordable and valuable for businesses to raise finance and investors will have greater choice of investment opportunities.
The merger is subject to approval by the CMA, FCA and their shareholders. Until then, both companies will continue as business as usual and remain competitive.
Crowdcube and Seedrs announced that they have agreed terms for a merger, in a move that will accelerate their plans to create the world’s largest private equity marketplace and further democratise investment. By joining forces, thousands of ambitious fast-growth businesses and millions of investors will be able to benefit from the best expertise, services and returns offered by Crowdcube’s and Seedrs’ investment platforms.
On completion, Jeff Kelisky, Seedrs’ CEO, will serve as CEO of the combined company, and Darren Westlake, Crowdcube’s CEO and co-founder, will serve as executive chairman. The management team will include key leaders from both businesses. The combined company aims to deliver new innovations and products that will make it significantly easier, more affordable and valuable for ambitious businesses to raise growth finance, and investors will have an even greater selection of investment opportunities with richer investment tools.
“Equity crowdfunding has redefined how many ambitious businesses raise investment and engage with their customers,” Darren Westlake, CEO and co-founder of Crowdcube, commented.
“Together with Seedrs, we can accelerate plans to further expand in the UK and overseas, launch innovative new products and improve our customers’ experience.”
Crowdcube and Seedrs play a key role in Europe’s fast growing equity funding ecosystem, both through their success of primary raises through crowdfunding and the scaling of their secondary offerings and wider marketplace initiatives.
Since 2011, £2 billion has been invested in campaigns on Crowdcube and Seedrs. Together they have helped more than 1,500 companies secure investment, including Brewdog, Revolut, Perkbox.
In the last 6 months they have seen significant milestones reached such as Crowdcube’s campaigns with what3words and Moneybox, two of the most popular equity crowdfund campaigns ever, and over £1million of private company shares traded in a single month on the Seedrs secondary market.
“We are both fintech pioneers that have challenged the landscape of capital raising in Europe, building marketplaces for private equity investment,” Jeff Kelisky, CEO of Seedrs, said.
“We believe that you need to be a player of greater scale to serve companies and the investors who support them. Now is the right time to bring our strengths together, in order to meet our common mission to deliver a step change in the accessibility and efficiency within private company investing.”
“This will not only create value for ambitious companies and their investors, but also for the economies and communities that they serve,” Kelisky said. “As we look to the future, we’ll be well positioned to build on our combined strengths and create a powerful global private equity marketplace that will transform the ecosystem of equity finance globally.”
The merger will be structured as an acquisition by Crowdcube of all of the outstanding share capital of Seedrs Limited via scheme of arrangement.
Existing Crowdcube shareholders and option holders will own 60% of the combined company, and existing Seedrs shareholders and option holders will own 40% of the combined company.
The merger ratio reflects the approximate valuations of the two companies based on each of their most recent fundraising rounds.
Following completion of the merger, the companies will work together to define how the two businesses will combine their teams, customers, brands, services and technologies.
The transaction is subject to approval by, among others, the UK Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA) and shareholders of the two companies as well as the sanction of the Court. The transaction is expected to be completed in late 2020 / early 2021.
About the equity investment market
The UK equity investment market was worth over £12 billion in 2019 and was the ‘busiest year on record’ for crowdfunding.
Crowdcube and Seedrs have collectively raised £2bn to date for 1,500 UK businesses.
Since lockdown, Freetrade, Moneybox and what3words have all raised over £7 million from over 35,000 investors – three of the most popular campaigns of equity crowdfunding history.
Over 20% of Seedrs’ and over 20% of Crowdcube’s 2019 deals were for £1 million or more
Seedrs saw a 49% growth in investment in 2019, compared to 2018.
The proposed merger creates substantial value for Crowdcube and Seedrs investors.
There have been 3 IPOs and 49 acquisitions of companies that have crowdfunded through one or both platforms.
In February, Pod Point, which raised on both Crowdcube and Seedrs, was acquired by EDF.
Three businesses, BrewDog, Monzo and Revolut, which are collectively valued at over £7 billion, have gone on to become unicorns following successful crowdfunding campaigns.
The Seedrs Secondary Market launched June 2017, has facilitated over 30,000 investor exits, and has seen more than £13m traded at up to 23x returns.
Both platforms have seen significant international growth.
In 2019, investment into overseas businesses, like Belgium-based e-bike pioneer, Cowboy, increased by 100% on Crowdcube, while Seedrs helped businesses from 16 different countries raise funds and had investors from 77 different countries.
As the world’s first investment crowdfunding platform, Crowdcube enables entrepreneurs to raise finance with the added benefit of being backed by their community. For investors, Crowdcube provides a way to hand-pick a stake in an innovative business they believe in that traditionally would have been restricted to professional investors.
Since 2011, Crowdcube has helped more than 1,120 raises successfully fundraise. With more than 900,000 members, a total of £1bn has invested on the platform to date.
Businesses that have successfully raised funds with Crowdcube include BrewDog, Camden Town Brewery (acquired by AB INBev), carwow, JustPark, eCar Club (acquired by Europcar), Feedr (acquired by Compass Group), Freetrade, Grind, Innis & Gunn, Mindful Chef, Monzo, Parcel2Go, Pod Point (acquired by EDF), Revolut, and Nutmeg.
Seedrs was launched in 2012 and has since grown into a leading online investment platform. It allows investors to buy and sell shares in private companies, and ambitious entrepreneurs to gain investment for their businesses while building communities in the process. Seedrs has funded over 1,140 deals, with nearly £1 billion invested on the platform to date.
Business that have successfully raised funds with Seedrs include Revolut, Perkbox, Wealthify (sold to Aviva), Tandem, FreeAgent (sold to RBS), Allplants, Stamplay (sold to Apple), Chapel Down, Assetz Capital, Courier (sold to Mailchimp), THIS, Humble Grape, JAJA Finance and Urban Massage. Seedrs is backed by leading European institutional investors as well as over 4,600 of its own customers.
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