What are the important differences between the EQ sites?

rogerbu
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What are the important differences between the EQ sites? Jun 1, 2015 8:42:34 GMT toonjamie likes this

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Post by rogerbu on Jun 1, 2015 8:42:34 GMT

I would like to share our knowledge on the fundamental differences between the various Equity Crowdfunding sites that are currently active.

What makes each one different?
Is this good or bad for us?

How does each site make its money?
How does this affect our ROI?

Is there any difference in the quality of their offered opportunities?

Are there any significant Process or IT issues with any of the platforms?

To start - Investor led Vs Entrepreneur led offerings.

As I understand it. Crowdcube & Seedrs (and probably most of the others) allow their prospective opportunities to value themselves, whereas Syndicate Room operates a process where lead investors negotiate a company and offering value after doing extensive Due Diligence.
See p2pindependentforum.com/thread/2471/investor-led-company-crowdfunding-platforms

It sounds as this must be better for retail investors, but is it?
Any thoughts on downsides as well as upside for us?.

Are Syndicate Room the only platform offering Investor Led?

Last Edit: Jun 1, 2015 8:44:30 GMT by rogerbu

bigfoot12
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What are the important differences between the EQ sites? Jun 1, 2015 19:23:19 GMT

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Post by bigfoot12 on Jun 1, 2015 19:23:19 GMT

I have tried to put objective things in this table. I have not registered with Crowd Cube so I am not as familiar with it as the other two, and I am quite a new member of Seedrs so my experience of it isn't fully developed. Please post if I have made a mistake and I will try to change it.

Name	Crowd Cube	Seedrs	Syndicate Room
Alt Fi First 5 months 2015 (£m)	27.9	(1)	8.1
Minimum Investment (£)	10	10	1000
Valuation set by	Company	Company	Negotiated between company and lead investor(s)
Available Investments	EIS/SEIS	EIS/SEIS	Mainly EIS (2)
Ownership	Direct	Nominee (3)	Direct
Share Class	B (4)	A	A (5)
Voting rights	No	No (6)	Yes
Pre-emption rights	No (7)	Yes	Yes
Company Charges % funds raised (9)	5.5	7.5	5.5
Investor Charges % profit	0	7.5	0
Typical number of investments available (8)	34	31	8

Notes

1 No Seedrs data on Altfi.

2 Syndicate Room does have occasional SEIS investments, but not many

3 It seems to be possible sometimes to be a direct shareholder with a £25k+ investment

4 'A' class often available for larger investments (£1k or £5k)

5 Usually the same class as lead investor, with same rights

6 The shares do carry voting rights but the nominee decides how to vote

7 Larger investors may get these

8 Based on one sample in June 2015

9 All platforms may charge legal fees and some also provide other services

Last Edit: Jun 1, 2015 19:25:12 GMT by bigfoot12

rogerbu
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What are the important differences between the EQ sites? Jun 2, 2015 14:24:42 GMT

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Post by rogerbu on Jun 2, 2015 14:24:42 GMT

Thanks @bigfoot - That is some very good info.

Pre-emption rights - Seedrs
The Seedrs Pre-emption rights section of the Investor Agreement (Section 10) is full of 'mays' instead of 'wills'.

However the SEEDRS blog is far more certain 'At Seedrs we believe that all investors, however small their investment, should be able to realise a maximum return on a successful investment. This is why we include pre-emption and tag-along provisions in all the investment agreements between us as nominee (on behalf of Seedrs investors) and the investee companies.'

bigfoot12
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What are the important differences between the EQ sites? Jun 2, 2015 20:28:32 GMT

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Post by bigfoot12 on Jun 2, 2015 20:28:32 GMT

Jun 2, 2015 14:24:42 GMT rogerbu said:

Pre-emption rights - Seedrs
The Seedrs Pre-emption rights section of the Investor Agreement (Section 10) is full of 'mays' instead of 'wills'.

However the SEEDRS blog is far more certain 'At Seedrs we believe that all investors, however small their investment, should be able to realise a maximum return on a successful investment. This is why we include pre-emption and tag-along provisions in all the investment agreements between us as nominee (on behalf of Seedrs investors) and the investee companies.'

I agree, it isn't clear. I think that part of the problem is that typically the agreement hasn't been negotiated at the point we invest, which is a little unsatisfactory.