Unlike most crowdfunding investors must reach a certain financial status before they can become accredited. But, platforms, which allow the typical person to offer a startup some money in exchange for a perk, British startup Seedrs has, since 2012, allowed them to take acquiring equity in the business in which they invest. To this point, it has not necessarily been as possible for people to back startups, as some platforms require that individuals be accredited (in the United States, it means that they have achieving certain financial marks) or that the prospective investor input thousands of dollars at a minimum. However, Seedrs aims to deliver this opportunity to the masses and has announced that a pair of influential Americans entrepreneurs, Path co-founder Dave Morin and Lyft co-founder Logan Green are coming aboard as advisers ahead of a move into the American market, which Seedrs has planned for a special version of their platform.
Seedrs operates by offering a marketplace for investors, drawn from all over Europe (or even outside of it) to invest (a minimum of 10 pounds or Euro) in businesses that they find particularly attractive. Like other crowdfunding platforms, Seedrs allows businesses to set a funding target and try to reach it within a certain period of time. If they fail to reach it, the investors are repaid in full. But if the startup exceeds the goal, they can opt for “overfunding”, which allows the entrepreneurs to raise additional money in exchange for additional equity. They are not required to accept the additional money, but the option is there. The startup has opted to generate revenue through commissions from both investors and the companies raising capital, taking 7.5% from each investor on whatever returns that they receive and another 7.5% (or less) from the amount that the startup manages to take in.
“Seedrs provides a solid amount of data about the traction that they have gained, noting that they have facilitated 20,367 investments in 2014 alone, with the typical investor putting in an average of 1,089 pounds per campaign.”