Crowdcube and Seedrs have announced that they have agreed terms for a merger, in a move that will accelerate their plans to create the world’s largest private equity marketplace and further democratise investment.
On completion, Jeff Kelisky, Seedrs’ CEO, will serve as CEO of the combined company, and Darren Westlake, Crowdcube’s CEO and co-founder, will serve as Executive Chairman. The management team will include key leaders from both businesses. The combined company aims to deliver new innovations and products that will make it significantly easier, more affordable and valuable for ambitious businesses to raise growth finance, and investors will have an even greater selection of investment opportunities with richer investment tools.
Darren Westlake, CEO and co-founder of Crowdcube, commented: “Equity crowdfunding has redefined how many ambitious businesses raise investment and engage with their customers. 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. Together with Seedrs, we can accelerate plans to further expand in the UK and overseas, launch innovative new products and improve our customers’ experience.”
Jeff Kelisky, CEO of Seedrs, – who was recently interviewed on our podcast – said: “We are both fintech pioneers that have challenged the landscape of capital raising in Europe, building marketplaces for private equity investment. We believe that you need to be a player of greater scale to serve companies and the investors who support them. 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. This will not only create value for ambitious companies and their investors, but also for the economies and communities that they serve. As we look to the future, we’ll be well positioned to build on our combined strengths and create a powerful global private equity marketplace that will transform the ecosystem of equity finance globally.”
The two leading investment platforms play a key role in Europe’s fast growing equity funding ecosystem, both through their success of primary raises through crowdfunding and the scaling of their secondary offerings and wider marketplace initiatives. Since 2011, £2 billion has been invested in campaigns on Crowdcube and Seedrs. Together they have helped more than 1,500 companies secure investment, including Brewdog, Revolut, Perkbox. In the last 6 months they have seen significant milestones reached such as Crowdcube’s campaigns with what3words and Moneybox, two of the most popular equity crowdfund campaigns ever, and over £1million of private company shares traded in a single month on the Seedrs secondary market.
The merger will be structured as an acquisition by Crowdcube of all of the outstanding share capital of Seedrs Limited via scheme of arrangement. Existing Crowdcube shareholders and option holders will own 60% of the combined company, and existing Seedrs shareholders and option holders will own 40% of the combined company. The merger ratio reflects the approximate valuations of the two companies based on each of their most recent fundraising rounds.
Following completion of the merger, the companies will work together to define how the two businesses will combine their teams, customers, brands, services and technologies.
The transaction is subject to approval by, among others, the UK Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA) and shareholders of the two companies as well as the sanction of the Court. The transaction is expected to be completed in late 2020 / early 2021.
Some were critical of the deal with, Rob Murray Brown, 60, a critic of standards in the industry, said that the merger would merely extend the life of the platforms but would not alter the fundamentals. “They are in a sense a reflection of so many of the zombies they help to fund,” he said.
One industry insider said that the merger made sense as it may help to stem losses, but it would not on its own tackle problems with the business model, including a lack of quality among fundraising companies.
