Equity Crowdfunding Platform Seedrs Raises $15.6M for US Expansion

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If you already read our seedrs.com review  great, if not then check it out so you can fully appreciate this great news posted on techcrunch .

Equity crowdfunding platform Seedrs has raised a $15.6 million (£10 million) Series A round led by Woodford Patient Capital Trust plc (WPCT) and Augmentum Capital, the money from which will be used to launch in the U.S. market. Seedrs had previously raised $7.2 million from Faber Ventures and it’s own crowdfunding campaign.

Furthermore, Seedrs is to launch a £2.5 million crowd funding campaign to give existing shareholders and new investors the opportunity to participate in the round. The details will be announced later.

Seedrs plans to now expand its marketing efforts in the U.K. and Europe, increase platform development activities and launch its business in the United States.

This fundraising now values Seedrs at £30 million on a fully-diluted, post-money basis. Tim Levene, Managing Partner of Augmentum, is joining the Seedrs board of directors in connection with the round.

In the U.K. Seedrs competes with CrowdCube, which has so far raised $6.5 million from Balderton Capital and Crowd Capital Ventures in a Series B.

Now it looks like it is just a matter of time until seedrs.com one of our favorite platforms will be open to US investors.

 

 

 

Can Jeff Bezos & Amazon Send Interest Rates to Zero?

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fundrise-amazon-graph
In chaos theory, the butterfly effect shows us how small events can create large unexpected changes later. The name comes from the idea that something as small as the flap of a butterfly’s wings could lead to a hurricane on the other side of the world.

Entrepreneurs, engineers, and tech junkies dream about the change they might create within a given system. Direct changes might include making books available for the first time online (i.e. Amazon), democratizing investing by lowering minimums and fees, or enabling friends to split the check at dinner without any cash exchanging hands.

The larger question is, what nonlinear butterfly effect does each of these technological innovations have? By making books available online did Jeff Bezos merely enable us to receive hard copies in the mail? Or did Amazon begin other ripple effects, such as the creation of the modern financial system?

Innovation = Change in Cost / Value

It seems clear in hindsight that Bezos made large strides for all future e-commerce sites in helping individuals feel comfortable with making purchases online, while changing the lifestyle of an entire generation once shackled to cars and brick-and-mortar retail.

These direct effects are easy to trace. The indirect ripple effects might not be so easy.

Trailblazers, and those around them, often cannot foresee the subsequent, nonlinear effects of certain actions. Is it possible that the ability to feel comfortable transacting online might lead to secular changes in interest rates forever and a complete overhaul of the financial system as we know it?

Paul Gebhart thinks so. His recent piece on “The End of Interest Rates” runs counter to the more popular narrative today that capital is seeing increasingly stronger returns as technology reduces headcount and labor costs.

Gebhart argues that return on capital will take a secular plunge to zero (and stay there) due to the persistence of technological disruption by online financial technology companies. This convergence to zero, Gebhart writes, will be the result of an abundance of capital enabled by technological progress.

As technology reduces the cost to start a business, excess capital is freed up to be deployed elsewhere.

Moreover, with technological innovation comes more efficient means of investing which lowers overhead costs and thus fees. With a disproportionate amount of capital chasing a finite number of passive investments, rates of return will shrink.

One could argue that this is already being demonstrated in today’s low interest rate environment. While it was common to earn in the high teens up to twenty-something percent in the 1980s, the past several years have shown investors struggling to earn even mid-single digit returns.

If the prevailing narratives are right, it certainly hasn’t yet been demonstrated for passive investors on a broad scale.

If Gebhart is onto something, will it mean the end of passive income. And, can we blame Bezos?

If it is the beginning of zero returns, that could certainly mean chaos.

Top Image Source: Wesley Fryer, Flickr

Progress vs. Return on Capital image source: Paul Gebhardt, Medium

 

Source: Kendall Davis Fundrise.com

 

The potential of equity crowdfunding

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careerAs equity crowdfunding has started to take shape in the past few years and new legislation Regulation A+ was just passed, the equity crowdfunding market is ripe for explosion. The potential that this new asset class brings to the retail investor is unclear and depends mostly on how well the platforms will be able to successfully navigate and adapt to the new legislation. It will also depend on how well the public receives this asset class and starts to invest in it.

One indication that is worthwhile to look at is where is the “smart money” going. People regularly look to see what stocks investment gurus or hedge funds are investing in and they use this as a gauge for their own investment ideas. I would like to tweak that approach a bit and to take a look at an article written by  Sherwood Neiss a partner at Crowdfund Capital Advisors, an expert in the industry and consider one of the “founding fathers” of Title III of the JOBS Act.

Ness, documents the investments that VC’s are making into the crowdfunding industry in terms of funding the various platforms that exist and seed funding for new platforms. Although he looks at the overall trend of investments both within rewards based crowdfunding and equity based crowdfunding, I want to really look at the equity based platform investments. This is what Ness had to say:

More than seven equity crowdfunding platforms have received over $180 million in financing, with the oldest among them being only four-years old. This too shows validation for a business model of which one of the two models (Title III, crowdfunding for all) has yet to go into effect. We anticipate equity crowdfunding to blossom in the next 36 months, with a majority of venture capital flowing into this space as early movers are proving the model, the media is covering it with more interest, and the global appetite for this sector expands significantly.

So even though this isn’t opened up for the retail investor as of yet, you can see that the smart investor are already pouring money into this industry. This should be a good indication of what the future holds for equity crowdfunding.

Click here to read the entire article on VentureBeat.com

 

 

 

 

Guide to Crowdfunding Investing

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crowd-trade-logo3e-transparentCrowdfunding has exploded as a great way to raise money on the internet for many different causes and projects. It basically allows anyone to share their project or cause and appeal to the masses for financial backing. It has recently been adopted (thanks to the JOBS Act) by various businesses as a new an innovative way for them to raise capital by selling equity or debt  in their project or business venture. This has evolved to create a new asset class for investors allowing “the crowd” to participate in funding start-ups, real-estate developments, or large income producing properties in return for equity or interest payments. In general I would categorize the offers available in to three groups:

Start-Ups

Start-up businesses offer equity to investors and although this is highly speculative the returns can be huge as well. These companies may only be an innovated idea or a company with a prototype of a product. They have no revenue or past performance to base their projections on. More about funding start-ups here.

Growth Companies

Private early stage companies are small private companies which are already selling a product or service and have already generated revenue. These companies are looking for financing to increase production or expand their businesses. These investments are more stable as they have a business model which is already producing revenue although they may not yet be profitable. The returns can be forecasted with much better accuracy and the company value is easier to determine. Some of our favorite platforms offering these type of investments are Circleup.com, Seedinvest.com and crowdfunder.com. Make sure to read our full circleup reviews , seedinvest reviews and crowdfunder reviews as well for more info.

Real Estate

Real Estate companies offer a number of options as well. They may sell debt, offer equity or a combination of both. These offerings may range from development projects of high-rise apartment buildings or single family homes to income producing properties such as elderly care facilities, hotels or commercial real estate. Some of our favorite options for real estate investing are fundrise.com, realcrowd.com, realtyshares.com and realtymogul.com click to see our thoughts and reviews.