The investment firm run by the UK’s most popular fund manager has given a vote of confidence to the equity crowdfunding sector, with an investment of £4 million in Seedrs, a platform backed by tennis player Andy Murray.
Neil Woodford’s investment, via two funds: Woodford Patient Capital Trust plc (WPCT) and Omnis Income and Growth Fund (Omnis), follows a previous £6mn investment by the firm in Seedrs in 2015, which allows investors to back early stage start-ups from as little as £50. The total of £10mn is the biggest investment by an institution in a crowdfunding platform in the UK.
Seedrs, valued at £40 million, is inviting existing shareholders and platform users to join Woodford in the fund raise through a campaign on its own platform, which launched today.
It plans to use the funds to deploy new products, boost sales and marketing efforts, launch strategic partnerships and infinitely scale campaign execution.
Jeff Kelisky, chief executive of Seedrs, said: “We are thrilled to have Woodford leading the round with £4 million, taking their total investment into Seedrs to £10 million. The capital we are raising will allow us to deliver our next stage of growth. Equally important to everyone at Seedrs was gaining agreement that we could open up an amount for the crowd. We already have nearly 1000 crowd investors following raises in 2013 and 2015 and many investors were disappointed to miss out on our last round.”
Seedrs has funded more than 510 deals, raising more than £250 million for companies using the platform, including a £3.8 million raise for Revolut in August.
Seedrs was named the most active investor in UK private companies by independent research agency Beauhurst in February 2017.
Equity crowdfunding in start-ups is the riskier end of the crowdfunding market, where losses should be expected by anyone parting with their cash to back projects. However the returns for projects that go well can be eye-popping.
In its first portfolio update in September 2016, the platform’s own analysis found that investing through Seedrs has produced better annualised rates of return (IRRs) than most other asset classes, with platform-wide IRR increases from 14.44 per cent to 49.1 per cent. However these figures include the uplift from generous Social Enterprise Investment Scheme and Enterprise Investment Scheme tax reliefs.
Seedrs says it “wants to conduct business with purpose, in a smart, modern and sustainable way and demonstrates its commitment to socially-minded business through its work with sustainable startups like Den, MacRebur and Mishergas.”
Den is a smart-home system that has several advantages, including reducing your electricity bill and improving the energy efficiency of homes. The company recently raised more than £2.2mn on Seedrs from more than 1,150 investors, including Andy Murray.
It also funded Scottish business MacRebur (£1.3mn from over 1,000 investors), a start-up that creates roads made from waste plastic and was backed by Brandon’s Vroom. Murray invested into this business too.
Seedrs also recently funded Sustainable Accelerator, led by Sustainable Ventures. Over the years, Sustainable Ventures has developed a successful portfolio of sustainability focused businesses, selecting the most innovative solutions and attracting significant later-stage funding.