In a new report ‘The Deal 2016’ released today by research agency Beauhurst, showed that crowdfunding had outperformed private equity with investment into non-listed high growth companies in the UK.
Seedrs, the Neil Woodford backed investment platform has again been named top investor into private companies in the UK, with Crowdcube, another notable crowdfunding site coming in second. Beauhurst commented: “If there is a reason to be optimistic about prospects for equity finance, it lies with crowdfunding.”
Seedrs funded 134 deals in 2016, with Crowdcube behind on 124. In fact Seedrs confirmed that 2016 was the platform’s strongest year to date with more than £85M invested into campaigns on the platform from 45,000 investments; over £20M more than in 2015. This bucked the market trend of a slight decline in crowdfunding numbers referenced in the report.
The two platforms - Seedrs and Crowdcube - ‘facilitate significantly more transactions than any other investors in the country’, Beauhurst stated, ‘together responsible for 86% of all crowdfunding activity and 21% of all equity investment in the UK’.
‘The Deal’, which explores equity investment in the UK released data from January 2016 through to February 2017, also shows crowdfunding’s emergence as a real alternative at the later stages of a companies growth with a 10% increase in growth stage crowdfunding. This data signifies increasing maturity in the market, with 80% of these later stage companies crowdfunding for the first time.
One such business is Seedrs alumni Tandem, a UK Challenger Bank which raised £2.2 million from 1715 investors, marked as ‘one to watch’ in 2017 by Beauhurst with over £52.3M raised over 8 fundraisings. The fintech business recently announced a £35M investment from House of Fraser who are partnering with the brand to develop an app-only banking service to customers.
The latter half of 2016 post referendum, was Seedrs strongest period to date with £20 million invested into campaigns on the platform in October alone which supports Beauhurst’s findings and their suggestion that Brexit has had little to no short-term impact on equity investment.
Some key raises on Seedrs during this period included leading employee perks company Perkbox which raised £4.3M in just two weeks and travel Money platform WeSwap which overfunded to £2.4M and had almost 3,000 investors in their campaign - the largest number of self-directed investors in crowdfunding history.
Seedrs noted an increasingly number of co-investments with VC firms, investing alongside the crowd, frequently on the same terms. Draper Esprit invested into Perkbox on Seedrs.
Simon Cook, CEO at Draper Esprit added: "We are strong believers that VCs, angels and the crowd can work together to provide the right long term patient capital to the best entrepreneurs, empowering teams to build global companies that last."
A seriously strong year for crowdfunding platforms ended with an IPO on LSEG AIM from cloud accounting software, FreeAgent, which raised £1.21 million from over 700 investors on Seedrs, becoming the first equity crowdfunded business to list on the public market and is currently trading at 50% up on their IPO price.
Jeff Lynn, CEO and co founder at Seedrs said: “2016 was a great year for crowdfunding, especially Seedrs. In late summer, we continued our European expansion, opening offices in Berlin and Amsterdam. In September we released our inaugural Portfolio Update to illustrate to our investors the performance of their early-stage investment portfolio.
“The on-going success of many of our portfolio companies, like FreeAgent, is exactly why equity crowdfunding is instrumentally important to the future of the early stage investment and why sophisticated investors should be looking at this asset class as a part of their high growth investment portfolio in 2017.”