Seedrs, a company based in London that deals with equity crowdfunding, has an eye on the U.S. market. Today, it announced that it has acquired Junction Investments, which is based in California, and operates in a similar market space.
As a company, Seedrs is most interesting for its ability, with certain caveats, to accept small dollar amounts from regular folks that can be converted via a sale process into equity in private companies. The United States, for now, has stricter rules about what class of individual can make similar investments.
Seedrs, however, wants in the U.S., as its purchase of Junction makes plain. I asked Seedrs CEO Jeff Lynn how the purchase will negotiate the differing regulatory climate between his company’s current home market and the rules in the U.S. that could make his current operations difficult. He said his firm’s plan for the U.S. market is to accept accredited investors. Lynn went on to indicate that the JOBS Act could change how it works in the U.S. market, however.
Provided that the regulatory structure of the capital markets in the United States is reformed to allow for more flexible dollar investments into startup firms by the average person, Seedrs could more directly apply its model here.
Yes, there is real risk for the user, but there are also safeguards you can create to help protect regular people, while also exposing them to the potential upside of investment into private corporations. That’s not to say that Seedrs won’t mess up, but instead that they have a fighting chance at not messing up.
I’m biased to a degree as I’ve spoken to Lynn a few times, and recently moderated a panel he was on. He seems like a decent Yank living abroad. Seedrs itself has allowed companies of various import to raise capital — consider it something approaching a micro to macro version of AngelList meets CircleUp.
On the competitive side, as TechCrunch wrote earlier today, “the folks at Alphaworks, the equity crowd-funding platform branched out of betaworks, are announcing leadership changes, with Erin Glenn taking the lead as CEO.” Seedrs won’t have the market to itself.
I wonder if appetite for what Seedrs vends will decline if we see the currently accelerated markets for growing companies cool. But at the same time, perhaps Seedrs’ ability to accrete capital from a broader investor base will be some sort of future proofing. For now, its intentions are clear. Let’s see how it executes.