dandy
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Post by dandy on Dec 18, 2016 18:29:14 GMT
does anyone know the latest with this? when does any investment made on seedrs convert to shares and when do we know how many shares?
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Dec 18, 2016 18:54:39 GMT
Depends on what the trigger event is, which will be outlined in the proposal. in this case a further equity investment, timing of which keeps moving but updates on goalpost position is provided by Stuart in the irregular updates.
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dandy
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Post by dandy on Dec 18, 2016 19:18:14 GMT
Depends on what the trigger event is, which will be outlined in the proposal. in this case a further equity investment, timing of which keeps moving but updates on goalpost position is provided by Stuart in the irregular updates. i thought it was max 2 years. do you know if they have been unable to raise equity since or not needed to?
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Post by mrclondon on Dec 18, 2016 19:19:38 GMT
AC's convertible raise on seedrs completed mid May 2015, with a 10% discount on conversion during the first year, then ramping up to 20% over the course of the second year. The trigger event for conversion will be a share placement of more than £x million and that will determine the value of AC and the share price. The conversion of the seedrs notes will give additional shares as per the discount. If no trigger event occurs by the long stop date (mid May 2017) the seedrs notes will convert to shares based on a fixed valuation of AC of £25m. Have a read through the quarterly updates made by AC on seedrs for their progress towards the trigger event. Ignore most of the discussion questions though, as most of the questions are based on incorrect / inappropriate assumptions. There is no real benefit to AC in going for an early trigger event, as ongoing trading history is more likely to be viewed as evidence for a higher valuation rather than a lower valuation. AC have had a further convertible raise with an institution in the meantime, and that will convert the same time as the seedrs notes. The downside of a later conversion is those individuals that had planned to use the EIS relief that (in theory) will arise on conversion in a particular tax year face a degree of uncertainty regarding tax planning. Also as samford71 commented recently, there is a degree of nervousness regarding whether EIS relief will still be available on conversion given the advent of QAA/30DAA since the seedrs raise could tip AC into being classified along with most finance providers as outside the remit of EIS. (Note that EIS is not available on the W&Co convertible notes for which the raise is currently under way on seedrs) |
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mikes1531
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Post by mikes1531 on Dec 20, 2016 4:13:34 GMT
Another potential downside of a late trigger event is that if they miss the two-year deadline and the company valuation actually turns out to be more than £25M then they'll be issuing more shares to Seedrs investors than they would have if they had met the deadline. That would be good news for the Seedrs investors.
OTOH, if the actual valuation turns out to be less than £25M then they might deliberately miss the deadline so as to issue fewer shares to Seedrs investors than they would have if they had met the deadline. That would be bad news for the Seedrs investors.
Anybody care to guess what the company valuation is likely to be?
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tonyr
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Post by tonyr on Dec 20, 2016 8:40:03 GMT
Anybody care to guess what the company valuation is likely to be? This will very much depend on whether they are seen as a first VC raise or now. It's very hard to get a £25m valuation for a first valuation (there are exceptions that make the press of course), it's just not what the VCs are used to thinking and how they structure their funds, etc. They could argue that they got their series A from us lot and that they've shown that they can deploy the money and grow the business and now they are looking for follow on funding, that would also be a reason to delay. Personally I'm disappointed that it's taken this long - this is not what we were led to believe at time of investing and 10% p.a. isn't great if you have funds in AC.
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mikes1531
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Post by mikes1531 on Dec 20, 2016 23:30:53 GMT
Anybody care to guess what the company valuation is likely to be? This will very much depend on whether they are seen as a first VC raise or now. It's very hard to get a £25m valuation for a first valuation (there are exceptions that make the press of course), it's just not what the VCs are used to thinking and how they structure their funds, etc. They could argue that they got their series A from us lot and that they've shown that they can deploy the money and grow the business and now they are looking for follow on funding, that would also be a reason to delay. They raised more than £3M via Seedrs, and IIRC they were trying to raise at least another similar amount via the institutional/VC investors in this initial funding round. I wouldn't have thought that they'd want to release as much as a quarter of the company in this first round, so I'd have thought they were aiming/hoping for a valuation well in excess of £25M. Am I misunderstanding/misinterpreting this whole concept?
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Post by vita19 on Dec 21, 2016 10:17:51 GMT
For the life of me I do not understand why there is any expectation of the company convert prior to the 2 year time window elapsing. Having an interest free loan to scale up your business to the max there is no incentive to not use the maximum amount of time.
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tonyr
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Post by tonyr on Dec 21, 2016 11:05:25 GMT
For the life of me I do not understand why there is any expectation of the company convert prior to the 2 year time window elapsing. Having an interest free loan to scale up your business to the max there is no incentive to not use the maximum amount of time. It's not interest free - but it is at a good rate of interest (10% p.a.)
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Post by vita19 on Dec 21, 2016 11:35:25 GMT
Offering a 10% discount is not paying 10% interest on a loan.
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tonyr
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Post by tonyr on Dec 21, 2016 17:11:20 GMT
Offering a 10% discount is not paying 10% interest on a loan. Agreed. I was thinking from an investors point of view, what we get goes up.
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mikes1531
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Post by mikes1531 on Dec 21, 2016 18:29:46 GMT
vita19: If AC don't pay dividends in their early years, then it would cost them nothing to trigger the issuance of shares sooner rather than later. And to the extent that an earlier trigger means they have to give fewer shares to Seedrs investors, wouldn't that be of benefit to them? Or is there something I'm not understanding?
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max
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Post by max on Dec 24, 2016 12:55:56 GMT
.... Anybody care to guess what the company valuation is likely to be? I have no idea but we could use the same (bizarre) methodology they used to get the valuation cap in the first place! AC started their Seedrs crowdfunding in Mar15, coming off the back of the very successful LendingClub IPO in Dec14. LendingClub's marketcap at IPO was valued at 1 x cumulative origination. The AC valuation cap was based on the same idea since that was roughly their cumulative origination at that time (I assume the floor was put in simply to stop the convert causing excessive dilution in the event of a low strike series A). So using the same metric then at this point LC has issued a cumulative $23bn in loans and is valued at $2bn, or 8.7% of origination. AC has originated £193mm, so 8.7% of that is £16.8mm. I think we have to accept that AC had a terrible 2015, despite the CEO talking about a series A trigger in 2Q and a £100mm of origination in 2015. They actually only printed something like £30mm or so. Moreover, from 2H15, the bubble in private equity fintech valuations started to deflate. The combination of low origination and a less bullish external backdrop made it unlikely they could get anywhere near their £60mm cap or even their £25mm floor in 2015. In 2016, AC has got their origination back on track but the LC debacle in 1H16 and generally less positive institutional bid for P2P companies (LC and OnDesk share prices have fallen 50% in 2016) has probably made it hard for AC to trigger the series A, especially above the £25mm floor. I suspect AC is simply biding its time and with far better looking full year revenue numbers in FY2016/17 than 2015/16 they will be in a stronger position to argue for a decent series A valuation. LendingClub is valued at around 4x 2016 forecast revenues so it would be interesting to know what AC's revenue numbers look like. If they have printed £110mm in loans and take total margin (upfront + trail income) of a say 5 percent, then that might argue for a valuation in the £20mm, perhaps more if you build in some decent growth expectations. If conversion happens in May 2017 at the floor evaluation of 25mm, does the 20% discount still apply?
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Post by pepperpot on Dec 24, 2016 14:54:56 GMT
If conversion happens in May 2017 at the floor evaluation of 25mm, does the 20% discount still apply? Yes. Confirmed by both SL and seedrs staff in the Q+A thread on seedrs. For the benefit of any direct investors who don't have access to the relevant seedrs page; Thomas Davies; "The discount does indeed apply at the Longstop Date at 20%. This is unusual, but was what was agreed by Assetz." Stuart Law; "Indeed - I recall agreeing this as it seemed correct and fair to do that."
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max
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Post by max on Dec 24, 2016 15:07:23 GMT
If so, then we will be not too far from a £16mm evaluation made by samford71I'm looking forward to seeing how the conversion pans out - I'm still considering it a decent bet. |
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