Seedrs toogether with its US parent company Republic Group is now the only platform where a company can raise funds in equity crowdfunding, simultaneously in the US, the UK and the EU. Randal MacDonald, head of Seedrs’ Dublin office and managing director for Europe, tells BeBeez International. And adds, the first global campaing is coming in the next few months
The launch of the first global equity crowdfunding campaign is expected soon. Randal MacDonald, Seedrs‘ head of the Dublin office and managing director for Europe tells BeBeez International in this interview. In 2023 alone, Seedrs, based in UK and one of the world’s largest equity crowdfunding platforms, raised £353 million (just under €417 million, see Seedrs’ 2023 Annual Report here), or 13x the amount raised by Italy’s largest player Mamacrowd (see CrowdfundingBuzz data here). Funds were raised for 266 success campaigns (304 were the campaigns launched) and subscribed by almost 34k investors. Not only in the UK, of course, but throughout Europe, including Italy where the platform raised around €3.1 million for 10 companies. And now new horizons for the British platform open, particularly in terms of placement power and investor reach, which counts up to 3 million people in 150 countries if we consider the Republic group alone. And this is due to the acquisition by the US group Republic, announced at the end of 2021 (see here a previous article by BeBeez) and completed in September 2022, on the one hand, and the entry into force of the new EU Crowdfunding Regulation, on the other hand (see here BeBeez Magazine no. 17’s cover story published on 27 January 2024).
Seedrs recently established a direct presence in Ireland and got authorized by Ireland’s Central bank to operate in the EU (see here CrowdfundingBuzz). However, the tougher equity crowdfunding market in 2023, as well as the venture capital market, has not shied away from weighing on Seedrs’ business as well, as evidenced by the volume of deals, which contributed to the UK platform’s decision to close operations in Sweden and Spain and manage operations directly from London. Randal MacDonald, head of Seedr’s Dublin office and managing director for Europe, explained BeBeez International what are Seedrs’ strategic guidelines for the new European crowdfunding market.
Q. The new EU regulation, in force since last November, has opened up the European crowdfunding market. Republic/Seedrs wants to be part of it, which is why it has opened a presence in Dublin. What do you think are the key success factors in what is now a continent-wide market?
A. For us the realisation of a European market that is fully open for business is a key step forward because fundraising campaigns no longer need to be tailored to suit the regulations in force in each single country. As a result, platforms like ours are able to more efficiently and effectively support European businesses and investors. From an operational standpoint we’re in a great position, we can leverage our scale and experience (with 300 people and a decade in the game) to serve a large number of companies without compromising on quality. The main challenge, of course, will be to offer investment opportunities that are well suited to and respectful of the characteristics of each country’s business culture.
Q. In a broader market, what can Seedrs offer to fundraising founders that local platforms don’t?
A. Basically, we have become the only global provider. Republic (Seedrs’ parent company) is now the only place a business can raise in the U.S, UK and EU simultaneously and we anticipate our first global raise in early 2024. On top of this, our product offering is what differentiates us as a business and, in time, this will be a big part of our European differentiation as well. Finally, scale: we’re the most active private investing platform in Europe and have unrivalled operational capacity.
Q. Is there a critical mass, in terms of funds raised, that must be achieved to be competitive in the European market? How much does Seedrs plan to raise in the EU market in 2024?
A. In terms of volume and value, our aim for 2024 is to exceed our 2023 numbers, i.e. £ 353 million spread over 266 campaigns with 77.000 individual investments. Of those campaigns, 88 exceeded £ one million.
Q. In order to achieve those targets, are you going to focus on a specific set of countries?
A. Not in particular. The Central Bank of Ireland allows us to generate revenue across the entire EU area. While there will be a natural focus on markets with a strong product fit that we have done significant business in in the past (such as The Netherlands), what we are going to prioritise is understanding the cultural and economic differences between one jurisdiction and another, and the levers that work well in one country but not necessarily in another.
Q. In order to achieve its targets, does Seedrs envisage any acquisitions in the EU area in the near term?
A. We haven’t ruled it out but acquisitions are a strategic tool to expand geographical footprint or to bring on board new tech. In other words, acquisitions must add value to our shareholders and stakeholders, including investors and founders.
Q. Do you have any negotiations going on at present?
A. Should a suitable and commercially sensible opportunity arise we will evaluate it on its merits and whether it makes sense with our overall strategy.
Q. Seedrs specialty is equity crowdfunding, a segment that did not perform greatly in 2023 mainly on account of high interest rates. This is mirrored also in Seeders’ numbers for 2023 compared with the previous years. Do you plan to step into other segment of the crowdfunding market?
A. Not at the moment or for the foreseeable future. In the short and medium terms we will stick to equity crowdfunding. We just obtained our European licence so we want to strengthen the business we are already great at. In the future, I can’t rule out that Seedrs would try to complement its offering with something else.
Q. Talking about coverage, why did Seedrs decide to pull out of Sweden and Spain after stating that those two countries are both key to its strategy? Was it a strategic U-turn?
A. It was not a U-turn but rather a rationalisation of the operations and execution of the deals originating from those two markets. While we sadly lost colleagues on the ground, we are not leaving Spain and Sweden and remain active in all European markets and are actively seeking to support businesses in all EU countries as per our licence. In fact, we just closed a campaign for a Spanish waste management company.
Q. What is Seedrs’ perception of the Italian market’s potential? What are Seedrs’ plans for the country?
A. I am confident about the prospects for crowdfunding in Italy. Just bear in mind that Italian startups and scaleups between 2016 and 2021 raised around Eur 5.1 billion and in 2023 they raised around Eur 1.3 billion, showing resilience to an unfavourable macro environment. Those figures demonstrate that there is a vibrant milieu of innovative companies in Italy seeking funds.
Q. Nevertheless, in Italy lending crowdfunding performed much better than equity in 2023, due to the high level of interest rates, that are slated to stay at current levels at least for the next few months. That is not great news for equity crowdfunding, your business.
A. I personally think that aside from the stabilisation of inflationary pressures all over Europe, which in turn will lead to a gradual reduction of interest rates maybe towards the second half of the year, there is still a huge amount of capital needed by tech startups, be them in software, blockchain or other fields, and Italy is no exception. Over the last few years crowdfunding has become a fully accepted part of the fundraising lifecycle and many founders look to see how they can make it part of their round as a matter of process. So, for us, the growth opportunity will be whether we can effectively offer our service in multiple jurisdictions,i.e. Europe, the UK and also the US as part of the Republic Group.
Q. Do you plan to establish a direct presence In Italy?
A. No, there is no immediate intention to establish a physical presence but, as I’ve said, our licence gives us the ability to operate in all European markets, including Italy and we’re hoping to onboard some fantastic Italian businesses this year.
Q. Does Seedrs plan to help a founder, an Italian one for instance, raise capital in multiple areas of the world at a time, for instance with a campaign both in Europe and the US?
A. Absolutely yes, but there are regulatory considerations. So if we facilitate a campaign in Europe and the UK it needs to comply with certain rules but it is different in the U.S. so we basically have to set another campaign meaning we have to effectively manage two campaigns at the same time. But ultimately, that is our target.
Q. Some big French banks already acquired stakes in French crowdfunding platforms. You spent several years at JP Morgan, so as a former banker, do you think this trend is set to continue, and is it a matter of concern?
A. I do not find it surprising because fintech companies like crowdfunding platforms have grown significantly over the last 5 years and are approaching things in a different way. At the same time banks have developed their own platforms that address a different aspect of the financial services landscape, in the sense that they handle financial deals in a way based on different criteria and arising from different circumstances. Crowdfunding is new and complex and is becoming more a part of the mainstream, so it makes perfect sense that banks are increasingly interested in fintech companies, including crowdfunding ones.
Q. So you do not regard banks as potential competitors?
A. We see them as complementary. Banks, like HSBC Innovation Banking , offer our clients a wide array of banking services, which is great for them and supports them while they hopefully mature into global brands. What is important for us is our capacity to efficiently deliver our product to support them in their journey. And we have sufficient experience and operational expertise to do that.
