Goncalo de Vasconcelos is the founder of the equity crowdfunding business The SyndicateRoom. He has an MBA from Judge Business School, University of Cambridge.
Business Leader Magazine spoke to Goncalo about his views on the Enterprise Investment Scheme, the SyndicateRoom and the future of the business.
Can you explain in more detail how the SyndicateRoom works?
The fundamental principal of the SyndicateRoom is that it doesn’t matter if you invest £1,000 as an online investor or £1m as a professional investor; everybody should make or lose the same amount of money on the pound for pound investment that is made. The platform makes it much easier to invest and fairly balances risk and reward.
What are the main barriers you have faced in establishing the business?
Before I launched the business it proved very hard to raise finance – which proved that I was addressing a market problem. Pre-launch, I was repeatedly being told that nobody is going to invest online and that I shouldn’t even start the business. Yet, here we are five years on and miles ahead of our founding predictions for the business.
How does the business compare to Seedrs and Crowdcube, who were the early adopters in the market?
These two equity crowdfunding platforms run what is called company-led platforms, whereby companies set the investment terms and restricted retail investors decide whether to invest under the terms set by the founder or entrepreneur.
What makes our platform different is that we pioneered the concept of the investor led equity crowdfunding platform, so you invest alongside a professional who negotiates the terms and they will have also put their own money in. Also, we only work with sophisticated investors – private, VCs and institutional investors.
What are the benefits to having the ‘lead investor’ format?
Our lead investors are experts and will take on specialist and complex investments in sectors such as Life Science. These investors have expertise in this area and will have a track record that the co-investor can see.
What are the typical deal sizes you’re seeing?
There is no such thing as typical, but it can be between £250,000 and £4m and the deals are typically EIS (Enterprise Investment Scheme) rounds. We also have our own EIS fund called Fund Twenty8.
What are your thoughts on future of your business?
I believe this is the future of private equity. When it comes to the rounds of £20m or more I think you need very specialised knowledge and you need a team that spends a lot of time with the business of interest.
However, anything that is from very early stage to VC level will benefit from our platform as we have a lead investor; and we can speed up the whole process because the technology and data we use allows us to do that.
How are you choosing the businesses on the platform that are put forward to receive investment?
It’s a very comprehensive process that companies go through. This is made up of three stages of due-diligence carried out by our team of analysts.
What is the vision for the business?
We want to be the number one platform for private companies to raise equity finance –and we want to be known for being fast and online. You don’t need to negotiate terms, you don’t need paperwork and you can save money on lawyers. We also fully understand and manage an EIS fund, which is a major vehicle for private investors.
What are your views on EIS and its future?
EIS has been around for 17 years and it’s not going to go anywhere, even less now so with Brexit. It brings vitality to the UK economy. When I travel around the world I am always asked about EIS because many countries don’t have a tax system like this and they would like to.
It’s not just for wealthy people and you can invest £1,000 and benefit from it. The difference is that high-net worth people tend to know more about it as they get professional advice.
In conclusion, I don’t believe it will be abolished because 90% of job creation in the UK comes from start-ups and scale-ups and having EIS is fundamental to this.
What impact is Brexit having on investors?
As a business owner, it’s just another barrier to get over and nobody knows what deal or outcome we will have. At present though, the data for investment into UK businesses shows no sign of slowing down. But I am cautious, and although I think in the long-term it will be OK, investors will start to hold onto cash as uncertainty bites and March approaches.
What advice would you have for somebody launching a new business?
My primary advice is – to do it because you can never be prepared enough. Secondary to this, is don’t take too much risk and don’t put your house on the line. This may seem counterintuitive to the guts of being an entrepreneur but if you don’t have your house on the line they you will be more willing to run other risks that will grow the business.
The way finance is structured now, you don’t need to take unnecessary risks.
Ultimately though, it’s a hard and long journey so my advice is also not to give up and in a way this is the most important advice you can have.