European equity-based crowdfunding platform Seedrs has started running campaigns that seek funding in exchange of ‘convertible’ equity. Future Ad Labs is the first company who is looking to raise funds, £400,000 int this case, in return for convertible equity on the platform.
A convertible equity funding means that the investor gets a discount on a ‘future valuation’ of the supported company, say, when a substantial VC rounds takes place with a market valuation. It’s a popular way of collecting funds in American startup scene, with the offered discount often interpreted as a reward for being an early supporter of a startup.
Tech companies in the US issue convertible equities when they need financing before they get ready for a full venture capital funding round, offer a discount for it to attract enough attention. Future Ad Labs’ discount on offer is 15%.
This is the second time when FAL has been seeking crowdfunding. Previously, it collected £60,000 from 70 investors via Seedrs. The London-based digital ads startup also secured $1 million previously from a group of VCs and angels that includes Passion Capital, Balderton Capital, Ballpark Ventures, and Ignite100.