Seedrs launches “digital alternative” to the Enterprise Investment Scheme (EIS)

The programme helps wealthy individuals invest in early-stage start-ups via financial intermediaries such as their accountants, brokers and consultants

Equity crowdfunding platform Seedrs has launched a “digital alternative” to the Enterprise Investment Scheme (EIS).

Allowing wealthy individuals easier access to invest in early-stage start-ups via financial intermediaries, such as their accountants, brokers and consultants, Seedrs says the programme has been launched in response to an “increased appetite” for start-up investing.

Historically the first port of call for high net worth individuals looking to back early-stage businesses alongside offline deals, the EIS offers investors a number of perks and incentives in return for investing in small, high-risk companies.

Seedrs claims that its platform has seen an “increasing level of interest from financial intermediaries” in the last 18 months – with such firms keen to help their clients grow their investment portfolios, yet conscious of excessive management fees associated with offline deals.

Equity crowdfunding has become increasingly appealing to high-net-worth individuals in the past number of years, as it offers investors access to a previously exclusive asset class with the potential of serious capital growth, diversification opportunities and the chance to support innovation.

According to Seedrs, over £3.6bn was invested into 1,203 equity deals in the UK in 2016, of which 23% was done through equity crowdfunding platforms.

The Startups 100-ranked businesses completed 11% of those deals itself, and has now funded over 540 deals and had more than £280m invested into campaigns on the platform.

High-growth portfolio companies on Seedrs include digital banking alternative Revolut (recently completed a $66m Series B round), English wine company Chapel Down (ISDX quoted), and accountancy software business FreeAgent (listed on AIM).

Furthermore beauty on demand start-up blow LTD recently received £7.5m from Debenhams offering Seedrs investors an exit opportunity after just one year at three-times their purchase share price.

Adam Reeve, investors manager at Seedrs:

“Investors and advisers are more conscious than ever about fees eroding portfolio returns, and achieving growth.

“Self-directed execution-only platforms for traditional asset classes, such as listed equities and bonds, have existed for many years and are a common route for sophisticated investors who wish to construct their own portfolios, without paying significant management fees.

“Previously there has been little or no equivalent for private equities, particularly seed and venture investing with only structured, managed products provided only to HNW investors. Seedrs offers this service.”

Thomas Davies, chief investment officer at Seedrs:

“Equity crowdfunding has become increasingly interesting to accountants, brokers and financial consultants.

“The Seedrs nominee structure gives advisers the peace of mind that their clients are investing on the same terms as professional VC firms, receiving full voting rights, often pre-emption rights, consent rights and tag along provisions to protect minority shareholder rights.

“Furthermore, investors can get as involved as they like with businesses, support great ideas as a mentor, beta tester, customer and contribute towards innovation, progress, economic growth and job creation across Europe.”