Crowdfunding platforms Crowdcube and Seedrs to merge
The UK’s two biggest crowdfunding platforms have announced plans to merge.
Crowdcube and Seedrs said in a joint statement on Monday they had agreed the terms of a merger. The combined company will be worth £140m ($181.2m).
Crowdcube will acquire Seedrs under the terms, with Crowdcube’s shareholders owning 60% of the combined business. Seedrs investors will receive 40%, reflecting the differing valuations of the two companies. Crowdcube was last valued at £84m and Seedrs is worth £56m. The exact financial terms weren’t disclosed.
“Today’s agreement is an incredibly exciting milestone that will benefit high growth businesses, their investors who believe in their vision and the wider entrepreneurial ecosystem that supports them,” said Darren Westlake, Crowdcube’s founder and chief executive.
“Together with Seedrs, we can accelerate plans to further expand in the UK and overseas, launch innovative new products and improve our customers’ experience.”
Westlake will serve as executive chairman of the combined business. Seedrs chief executive Jeff Kelisky will serve as CEO.
“We believe that you need to be a player of greater scale to serve companies and the investors who support them,” Kelisky said in a statement. “Now is the right time to bring our strengths together, in order to meet our common mission to deliver a step change in the accessibility and efficiency within private company investing.”
The merger is subject to approval by shareholders in both companies, the UK’s Competition and Markets Authority, and the Financial Conduct Authority. The deal is expected to close either at the end of this year or early in 2021.
The deal will bring together the UK’s two main crowdfunding platforms. Both have long vied for the title of the UK’s biggest and have long been seen as close competitors.
Crowdcube was founded in 2011 in Exeter, claiming to be the world’s first equity crowdfunding platform. Startups can sell shares in their business directly to retail investors over Crowdcube’s platform. It has been used by the likes of BrewDog, Revolut, Monzo, and Grind coffee.
Seedrs was founded in London in 2012 and offers a similar model, although investments are structured differently. Startups like FreeAgent, Chapel Down winery, and Urban Massage have used Seedrs to raise money.
Between them, both platforms have facilitated investment of over £2bn into businesses.
Crowdcube employs 70 people and Seedrs has 80 staff.
The two firms are among the highest profile companies to come out of the UK’s fintech — financial technology — sector, which has boomed in the past decade. Crowdcube has raised over £30m from investors and Seedrs has raised a similar sum.
Both businesses are loss making. Crowdcube lost £2.6m on revenues of £7.6m last year and Seedrs lost £3.9m on revenues of £3.1m in 2018, the most recent period covered by public accounts.
Charles Delingpole, the founder of another leading UK financial technology company, ComplyAdvantage, said the deal was a “fantastic outcome for all parties.”
“The duplication from running two parallel exchanges is suboptimal, and having a single champion exchange will ensure that more can be invested in a great range of functionality and opportunities for all stakeholders,” he told Yahoo Finance UK.
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