There was a time, Jeff Lynn told a packed auditorium at Cass Business School, that startup investment was just for the rich. If you had assets over a certain threshold it was fine to take risks. But if you didn’t, then there was a presumption by regulators that you were some kind of blithering idiot when it came to analysing equity investment opportunities.
Platforms like Seedrs, which Lynn founded three years ago, have changed that landscape considerably, providing entrepreneurs with an opportunity to attract supporters willing to invest as little as £10 if they believe in an idea.
Seedrs takes 7.5% of each funding round + 7.5% from investors should the business complete a successful exit. No company has yet exited successfully, but this is a young company at the forefront of a new industry.
As the world’s first regulated crowdfunding platform Seedrs has blazed a trail in offering start-ups new funding opportunities and greatly broadening the range of companies looking to get equity funding – from theatre productions to specialist ice cream makers.
If this sounds like the right route for your venture, what are the secrets of success? Jeff shared three:
1) Be realistic in your valuation – over the past year valuations on crowdfunding platforms have been creeping up. However, Jeff said that the entrepreneurs who close funding rounds have a realistic view of what their startup is worth.
2) The pitch must be quality – Jeff talked at length about Oppo ice cream whose management team he loves. Their story? They once talked their way onto the Prime Minister’s plane to sell British ice cream to the Italians. Kudos.
3) You have to have a great campaign – check out why Jeff thinks SHAREIGHT was a record fundraiser on the Seedrs platform. Investors are not blithering idiots.
Whether rich or poor, most can recognise good risk vs reward (or jump in behind others that do). They also want to be engaged by a story that is authentic, presented by entrepreneurs who really work to close their fundraising round. Great advice from Citizen Jeff, one of the people democratising startup funding.
Jeff Lynn was in conversation with Axel Threlfall at the latest [email protected], a Cass Business School event, sponsored by Thomson Reuters, with the support of Cass Entrepreneurs Network (CEN).