Crowdcube and Seedrs announce merger plans to create one of the world’s largest private equity marketplaces

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Today, British crowdfunding platforms Crowdcube and Seedrs have agreed to a merger, in a move that will create one of the world’s largest private equity marketplaces.

By joining forces, thousands of ambitious fast-growth businesses and millions of investors will be able to benefit from the joint expertise, services and returns offered by Crowdcube and Seedrs’ investment platforms.

On completion, Jeff Kelisky, Seedrs’ CEO, will serve as CEO of the combined company, and Darren Westlake, Crowdcube CEO and co-founder, will serve as Executive Chairman. The management team will include key leaders from both businesses.

Darren Westlake, CEO and co-founder of Crowdcube, commented: “Equity crowdfunding has redefined how many ambitious businesses raise investment and engage with their customers. Today’s agreement is an incredibly exciting milestone that will benefit high growth businesses, their investors who believe in their vision and the wider entrepreneurial ecosystem that supports them. Together with Seedrs, we can accelerate plans to further expand in the UK and overseas, launch innovative new products and improve our customers’ experience.”

Jeff Kelisky, CEO of Seedrs, said: “We are both fintech pioneers that have challenged the landscape of capital raising in Europe, building marketplaces for private equity investment. 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 of 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. 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.”

Since 2011, more than £2bn has been invested in campaigns on Crowdcube and Seedrs – and together they have helped more than 1500 companies secure investment, including unicorn businesses BrewDog and Revolut.

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.

Before the merger is formally completed, the deal will need to go through an approval process with shareholders, the Competition & Markets Authority (CMA) and the Financial Conduct Authority (FCA). The transaction is expected to be completed in late 2020/early 2021.

What impact will this have on SMEs looking for equity funding?

Yesterday, it was announced that Seedrs had agreed to the merger with Crowdcube in a move that will create “one of the world’s largest private equity marketplaces”.

The merger will be structured as an acquisition of Seedrs by Crowdcube, with Crowdcube shareholders owning 60 per cent of the combined company, and Seedrs shareholders owning 40 per cent. The transaction, which is expected to be completed in late 2020 or early 2021, is subject to approval by shareholders, as well as the Financial Conduct Authority and the UK Competition and Markets Authority, which could block the merger on grounds of a monopoly.

Luke Davis, CEO and Founder of EIS specialist VC firm, IW Capital, commented on what this merger could mean for the future of private equity:  “For thousands of businesses that will start-up over the next year or so, they will have to navigate a post-pandemic economy; one never seen before in recent times. With many existing businesses taking on debt to see them through lockdown, start-up capital in the form of private equity has never been more attractive.

“With the average successful amount raised of $7,000, this can be helpful cash to help get an idea off the ground if friends and families aren’t able to help. However, entrepreneurs need support to both raise the money they need, protect the equity remaining in the businesses to allow for future raises and keep to a business plan. Crowdfunding is not always the best option for scaling businesses and business leaders need to be made aware of all the options, even just within the private equity space.

“Operating with a venture capital firm has its advantages in so far as it allows business leaders to deal with a real person who is tapping into their own client list. That gives them the ability to raise from investors who have experience in the sector and can use their business acumen and experience to help accelerate the growth of the venture. When people are deciding how to raise money, they should explore every avenue of private equity at every stage of a raise, whether it be seed, series A or beyond. Each business is different and requires a slightly different approach, and VC private equity can help tailor a solution of most businesses looking to grow.”

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