Crowdfunding for equity is a hot topic right now. Much of the discussion centers around the JOBS Act, which is currently under deliberation by the U.S. Securities and Exchange Commission (SEC). Across the pond, however, equity-based crowdfunding has already taken off.
Last week, we spoke with Alysia Wanczyk, marketing director for the U.K.-based crowdfunding platform Seedrs, to learn about the company’s progress and plans for the future. The first part of that discussion is available below; part two will be live on Crowdsourcing.org later this week.
Eric Blattberg, Crowdsourcing.org: Could you provide a brief introduction to the platform for our readers?
Alysia Wanczyk, Seedrs: Seedrs started in 2009. Our cofounders met while studying at Oxford in the UK. One is Jeff Lynn, our CEO. His background was in securities law, [first] in the U.S. and then in the U.K. And the other cofounder, Carlos Silva, was an ethical financial services hacker, so he’s very well versed on security and finance. It was really Carlos Silva’s idea to open up investing to the masses. So with his and Jeff’s background, they thought, “Actually, yeah, let’s give this a go.” So they started embarking on the Seedrs journey.
They spent about 18 months preparing for Financial Services Authority (FSA) authorization. They wanted to open up investing in private companies to the masses, and when you’re opening up securities, you need to be regulated. So they underwent that in 2009, and then once they submitted the application, it took another 13 months to receive authorization. So in May of 2012, we became the first crowdfunding platform in the world to receive regulatory approval. Essentially, in July of last year we launched to the UK, allowing anyone to invest as little as £10 pounds into the seed stage startups on our site, and allow those seed stage entrepreneurs to raise up to £150,000 pounds of capital from their friends, family, another independent investors.
Not to get too off track, but what does being an ‘ethical financial services hacker’ entail?
Well Carlos [Silva] tries not to talk too much about it, but essentially he found flaws in financial institutions’ websites and then let them know, so that he could set up meetings with them to fix them. So he didn’t do it for evil, he did it for good.
Well that’s good! (laughs) So what benefits does being FSA-certified offer Seedrs and its investors?
The authorization itself offers some credence and prestige to what we’re doing; it shows that we’re legitimate platform. We very much took the approach when launching that our main focus of driving growth was going to be investors, and so to build up the relationship of trust and credibility with them, we had to be authorized.
[The authorization] was very hard to get, but we’d very much love to see more and more platforms become authorized to really help develop the marketplace. And actually, while there’s so much going on in the U.S. with the JOBS Act, the U.K. is really forward thinking and ahead of the curve on equity crowdfunding. There’s us and there are a few other platforms coming up with FSA authorization, and we think that’s great for developing the marketplace. The securities regulations in the U.K. are flexible enough to make authorization easier than it is in the U.S.