Seedrs Review: How to Invest in High-Growth Companies with Seedrs

Seedrs Review How to Invest in High-Growth Companies with Seedrs
My Seedrs Review
  • Invested in Seedrs - €1 000
  • Self-reported returns - 13.06%
  • Investing time on Seedrs - 12 months
  • £25 Sign-up Bonus
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My Seedrs Overview:

Why I Invest with Seedrs:

1) Larger potential: early commercial investments lead to a larger fixed price investment. The downside is limited to the money you have invested.

2) Tax advantages: companies eligible for SEIS provide tax advantages. They allow a tax deduction if the investment is in a hold for a specified period, which reduces the disadvantages. Ask for more advice if this is important.

3) Assistance to new companies: direct assistance to startups can be an added advantage for some, and they often offer more advantages and discounts if your investment is greater than a certain size.

4) Fees charged only on profits: there are no fees to maintain your account, as investors get fines only if they sell the investment.

6) Good connections: investors stay informed of frequent updates.

*Get £25 investment credit when you sig-up and invest £150 in the first 30 days. Promo will be applied automatically.

What is Seedrs?

Seedrs is a crowdfunding platform where investors have exclusive access to invest in new high-growth startups and established companies, looking for another round of funding. A few P2P platforms specialize in crowdfunding. Among them, Seedrs crowdfunding platform is the oldest and perhaps the best in the field.

Seedrs is a well-established crowdfunding platform launched in 2012. The platform allows new businesses to raise capital by promoting their shares or equities to a significant crowd of investors worldwide. The business of crowdfunding is very different from the platforms that engage in lending money to new companies.

The difference between equity and debt has advantages for both investors and businesses. Businesses do not hinder debt repayment and do not have to pay investors a fixed amount like loans if they can persuade the bank to borrow them. In return, the company gets the payments in the future, either as dividends when making profits or in the value of the shares when an acquisition takes place.

From an investor’s point of view, these aspects can be attractive. The investment can be paid several times, unlike a loan that pays only a fixed amount. Of course, there is also a risk because if the business fails, the investment will be lost entirely.

Seedrs Review

Get £25 Sign-up Bonus

Get £25 investment credit when you sig-up and invest £150 in the first 30 days. Promo will be applied automatically.

Who are Seedrs Investors? Who can Invest Through Seedrs?

You can invest through Seedrs crowdfunding platform if you are at least 18 years old. You must be a resident in certain jurisdictions. If you are an institutional investor, you must also be incorporated in these countries. Currently, Seedrs accepts investors from the UK and Europe and investors who reside in some jurisdictions outside the UK and Europe. During the process of registration, you may see if your country is within the list.

During registration, you will be asked to complete a short Investment Authorisation Questionnaire, or you may choose to self-certify as a “high net worth individual/institution” or a “sophisticated investor.” The process intends to show Seedrs that investors have the proper understanding and judgment to appreciate the risk involved in investing in private companies.

Seedrs Crowdfunding Review: How Does Seedrs Work?

There are three types of campaigns running on the Seedrs crowdfunding platform and the following facts will give you an idea of how this crowdfunding platform works.

Equity Campaigns

Of these three campaigns, these are the most used and the simplest campaigns available on Seedrs. With this option, investors and shareholders can become shareholders in the business by giving them some ownership in the business. 

Investors can get this franchise from as little as €10, a unique feature of Seedrs that you cannot see on other investment platforms.

Convertible Campaigns

These campaigns serve the companies that hope for larger rounds of funding. As an investor, you can invest in these convertible campaigns. One can convert each into future share campaigns from just € 10, which is incredibly impressive.

Fund Campaigns

This type of campaign allows investors to invest in several companies, and they can become shareholders of each startup by investing only 100 euros. One of the advantages that investors get by investing in fundraising is that they can diversify their investments.

Sign-up Offer for Seedrs

There is a small registration incentive for new customers. Get £25 investment credit when you sig-up and invest £150 in the first 30 days. You can use the bonus to invest in a business on Seedrs.

Seedrs Review Invest in High-Growth Businesses

Get £25 Sign-up Bonus

Get £25 investment credit when you sig-up and invest £150 in the first 30 days. Promo will be applied automatically.

What are Seedrs Fees?

Let’s explain what are Seedrs Fees and how they work in each of the three cases below:

1) Upon investing you will have to pay 1% of the total sum you are investing, but no less than £/€0.5 and no more than £/€250 (that’s the cap).

2) 0% periodic holding fee, which means that Seedrs doesn’t have any annual fees for holding your investments/shares on their platform.

3) Sell if a company exits – generally, if a company exits, you will pay 0% on the sale, but you will be charged a 7.5% carry fee on any profit you make. This, in my opinion, is a bit too high, but I like the platform because it is one of the most established crowdfunding platforms that gives me access to companies, which otherwise I won’t be able to invest in.

How Does Seedrs Secondary Market Work?

Seedrs has a secondary market. Here is what you need to know about it.

Seedrs secondary market is open for one week, starting on the first Tuesday of every month at 11:00 am and ending on the following Tuesday at 11:00 am.

While investors can request to sell shares at any time, they can only request to buy shares while the market is open.

What are the benefits of buying shares on Seedrs secondary market:

  • The Benefits for Buyers: Buyers can invest in businesses outside of a funding round and you can buy more shares in businesses you already own.
  • The Benefits for Sellers: You can harvest the returns of your investments and rebalance your investment portfolio by directly receiving the funds in your Seedrs investment account. You can then withdraw the funds or invest in more companies.
  • The Benefits for Companies: the secondary market is a more attractive tool for investors. This makes it easier for future rounds to attract new investors. The secondary market is an opportunity for the investors to exit the market when they’re ready, even if your company is not ready. It’s a win-win game.

Are there fees on Seedrs secondary market?

Yes, Seedrs secondary market has fees. For both Buyers and Sellers, there is a 1.5% transaction fee (min.£/€0.50).

Additionally, if the seller makes a profit, he will be charged a 7.5% carry fee on any profit earned.

For example:

  • If after the transaction fees you buy at $100 and sell at $100, you pay $0.
  • If after the transaction fees you buy at $100 and sell at $90 you pay $0.
  • If after the transaction fees you buy at $100 and sell at $200 you will have to pay $7.50 (7.5% of $100 profit).

This carry fee is also known as a “Success fee” or an “Administration Fee.”

How Do You Make Money from Seedrs?

Investing in equity crowdfunding is about selecting growth-focused and early-stage businesses that have the potential to grow. You invest money in these companies in exchange for a part of their equity. If you invest in a business that succeeds, the equity you own (shares) will be worth more than what you have initially paid.

Thus, the main way to make money from Seedrs (from your investments) is by selling your shares in the businesses you have already invested for more than you paid initially. There is an option to sell your shares on Seedrs’ Secondary market.

Further, if the company you have invested in grows so much that its shares become available on a stock exchange, bought by a bigger company, or they decide to execute shares buyback, you are most likely to sell your shares at that stage, often at a significant profit.

There is the option for some businesses to start paying dividends. If a company starts paying dividends, it means that monthly, quarterly, or yearly you will be paid dividends while still owning your shares from that company and also while these shares grow in prices (if of course, the business is doing well).

Seedrs Returns

Seedrs returns will vary and depend on the type of investments you made and your diversified portfolio. I cannot speak for the whole, but here are my returns on Seedrs so far:

Seedrs Returns

From the screenshot above, you can see that I have invested €1 561.77 in 37 businesses. We can call it a diversified portfolio. The value of my current portfolio is €1 688.20.

There are two ways to calculate my returns:

  1. IRR (Internal Rate of Return) – I will cite Seedrs: “IRR shows the annualized performance of your investments net of any fees (taking into account the impact of any shares bought or sold on the Seedrs Secondary Market as well as any other distributions received). Past performance is not a reliable indicator of future results and the IRR may go down as well as up.”
  2. IRR (tax-adjusted) – I will again cite Seedrs: “This is the IRR, as adjusted to take account of S/EIS tax reliefs. Past performance is not a reliable indicator of future results and the IRR may go down as well as up. Tax treatment depends on individual circumstances and is subject to change in future.”

Since I cannot take advantage of the S/EIS tax reliefs, my Seedrs returns are 3.59%. You may think that the return is too low, but you may have to think again. These are investments in early-stage, early-growth businesses, which one day may show a return of 1000%+. The magic is to hold on to them until the right moment for reaping the harvest.

How is Your Money Protected on Seedrs Crowdfunding Platform?

You should notice that investors’ money is transferred directly to companies and does not remain on the Seedrs platform. As such, they have no protection, and Seedrs does not save money. If Seedrs fails, the participation certificates will remain in force.

What are the Benefits of Investing on the Seedrs Crowdfunding Platform?

  • Larger potential: early commercial investments lead to a larger fixed price investment. The downside is limited to the money you have invested.
  • Tax advantages: companies eligible for SEIS provide tax advantages. They allow a tax deduction if the investment is on hold for a specified period, which reduces the disadvantages. Ask for more advice if this is important.
  • Assistance to new companies: direct assistance to startups can be an added advantage for some, and they often offer more advantages and discounts if your investment is greater than a certain size.
  • Fees charged only on profits: there are no fees to maintain your account, as investors get fines only if they sell the investment.
  • Good connections: investors stay informed of frequent updates.

Seed Investment Strategy

Due to the unpredictability of the new business and its high failure rate, it would be appropriate to recommend any specific work on another business. My general advice is somewhat general:

  • Read the prospectus: Try to imagine a future business. For huge gains in market value, changes in the business must be visible. If the business can grow quickly, this is a promising sign; on the contrary, a small chain of stores can take a long time to develop.
  • Valuation of the valuation: The quoted market price implies an appreciation of the whole of the company. Ask yourself if it is worth paying in terms of future cash flow. It is not because the business starts that the investment is worth it.
  • Keeping investments low: diversification is the key. Distributing funds across many businesses increases your chances of success.
  • As this is the riskiest form of investment, you should risk only the money you can lose.

Seedrs Review Final Thoughts

Seedrs provides a great way to fund startups transparently and can offer separate tax benefits to those who qualify. There is a lot of fun and excitement for your money as you follow the path of investment companies and it remains visible whether it is a path to your wealth. Without a doubt, Seedrs’ priorities lie with the businesses supporting more transparency within the start-up environment.

Get £25 Sign-up Bonus

Get £25 investment credit when you sig-up and invest £150 in the first 30 days. Promo will be applied automatically.

Also, check out our p2p cashback offers available for new investors. I’ve selected Crowdestor in my list for the best B2C crowdfunding platforms to survive COVID-19.


Some links on this page may contain affiliate links, which means that I may earn a commission if you register through them. None of the posts on this blog have been sponsored. Opinions are mine.

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