Harnessing the Capital of the Crowds How Small Investment Can Lead to Big Business Jeff Lynn CEO and Co-Founder, Seedrs 4 October 2012
The Problem with Crowdfunding• It covers lots of different economic activities: Politics Consumerism Emotion Profit
The Investment Side• It’s a subset of crowdfunding, but that doesn’t mean much• More importantly, it’s part of two critical evolutions • Evolution of finance – from the rich to the masses • Evolution of the Internet – from e-commerce to electronic finance
Startup Investing and the Masses• In the absence of online platforms, investing in startups is limited to the rich (top 1%)• The top 20% have investable capital • The majority of investable capital held by individuals is held by people in the 2%-20% (mass affluent) • The mass affluent aren’t mega-rich, but they tend to be sensible, grown-up adults who can, and would like to, invest their money as they choose
Startup Investing and the Masses• We see startups as an appealing asset class for the mass affluent • Strong returns • 22% IRR • Average 2.2x over 3.6 years • Risky but not complex – two very different things • Particularly appealing in light of the alternatives
Startup Investing and the Masses• Platforms like Seedrs give the mass affluent a chance to invest in startups• This in turn opens a new pool of capital to entrepreneurs
Startup Investing and the Internet• In the absence of on-line platforms, it is hard for anyone to build a portfolio of startup investments • It takes lots of time (>20 hour per deal) • It takes lots of money (>£10,000 per deal)
Startup Investing and the Internet• For startup investing to be sustainably profitable, you need to have a very wide portfolio • Data shows the returns are strong, but they’re skewed • 81% of returns came from 9% of startups • 56% of investments failed • A well-constructed portfolio includes 50 investments or more
Startup Investing and the Internet• Platforms like Seedrs give investors a way to build a portfolio of startups instead of• This in turn allows a wider range of startups to get funded
Conclusions• Crowdfunding is great – but it’s a broad term that doesn’t mean very much• Investing in startups online, though, is an important development • New investors • New way to build a portfolio
Questions? @seedrs @jeffseedrsSeedrs Limited firstname.lastname@example.org Chapel Place t +44 (0)20 8638 0650Rivington StreetLondon EC2A 3DQUnited Kingdom www.seedrs.comSeedrs Limited is authorised and regulated by the Financial Services Authority.
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