Seedrs Secondary Market

As my comment on the seedrs blog post hints, EIS/SEIS reliefs complicate the matter. Personally I can not see how the price paid for a share on the PM that has attracted EIS/SEIS relief can be considered as fair value for a purchaser of the same share on the SM.

I'm assuming the seller has to repay HMRC any income tax relief received if they sell within 3 years, and the buyer has no recourse to EIS/SEIS.

Yeah, I can think of one or two non-EIS qualifying companies that will be traded first!

I think it's for these kinds of EIS tax issues that Seedrs are going slowly at first here.

If you have held for less than 3 years, then you'll need to pay HMRC back.

Note that you cannot buy in to a company afresh, only raise an existing stake. This is because you cannot see the company details unless already invested. Seedrs say this is to avoid "information assymetry".

They have just announced that they are widening secondary market so that anyone can buy anything, but still at the fixed 'fair value'.

In P2P the purchases I regret most were those made on secondary markets. I doubt I'll be making the same mistake with equities. For sure there are companies I would love to invest in at the last raise price even without EIS, but how many of those will be for sale, and how many awful offers would I have to search through to find the one golden needle?  

Foy myself I see the secondary market mainly as an avenue to sell some of my shares, not to invest (i do that when the are up on the primary market) 

From memory they use a methodology taken from private equity or VCTs, but as Seedrs have hundreds of companies that they don't know well it is unlikely to be accurate. I think that it is likely that it overstates returns.

You knew that when you invested didn't you? My working assumption is that the companies I have invested in are targeting a return in 3-5 years and I assume that it will take at least a couple of years longer, so I make each investment on the basis of 7+ years.

I agree with wiseclerk , and suggest you do as he does. He seems to know about P2P and finance and we can see that 85%+ of his investments are in this. You should look for investments in an area you know something about. I think that many companies are obviously going to fail, and some of these get funded - there are too many people throwing £20 or £50 at a company because they like the name, or they like chocolate or beer.
Crowd funding is too new in the UK to have any reliable data. I think that more companies are getting funded than used to. I still think that there are great companies out there, and if you know an industry or a technology you can invest a small amount, and then increase your stake as they demonstrate that both their product and execution are worthy.

If there would be more transparency within the whole Seedrs portfolio (which is already much more transparent with the portfolio reports than the competitors), I would maybe try autoinvest. The portfolio reports clearly have the punchline that you need a high degree of diversification with ECF, even higher than for a stock or p2p portfolio. And to reach a portfolio size of maybe 100 selected Start-ups is way too time consuming for small amouts, maybe ok if it is your hobby to study pitch decks and read discussions with the entrepreneurs. But if you just want to benefit from the ECF asset class, it´s not so bad to use autoinvest since the latest portfolio report states that you would have "gained" ~12 p.a. in the past 5 years (according to the "fair" value & past return are not indication for future return, of course). Only few investors exceeded that.