Micro-investing platform Odin — which lets investors pool their cheques to back startups and VC funds — has been told to stop onboarding new customers and halt new and partially funded live deals by the UK financial regulator the FCA.
In a public statement issued Sunday, the UK-based startup said that “the FCA has come to the view that deal syndication on a software platform like Odin’s requires a specific regulatory permission that we do not have”.
“We’ve also had some upset customers and we want to say — we hear you, and we understand why you’re annoyed.”
Odin launched in April 2023 as a platform that rolls small cheque investors looking to back startups and VCs into a single entity, to make cap tables and LP bases less messy. Those can be retail and professional investors, who can back companies and investment firms with as little as $1,000 via the platform.
The company announced a $3m raise a month after launching.
Sifted has approached the FCA for comment.
Halting deals
Odin’s statement said live deals that are partially funded will be closed free of charge — and opened again at no cost when the platform is operational.
“[The FCA] has advised us that we should obtain a specific regulatory permission called ‘Arranging Investments’,” Odin cofounder Patrick Ryan tells Sifted — which is required to arrange investments that combine cheques from both retail and professional clients.
A retail investor is anyone who is not registered as a professional investor under FCA regulation.
Odin said in its statement that it was advised by its lawyers that the company was able to “benefit” from exemptions to that regulation. The company’s website says it’s not regulated by the FCA.
“We have had consistent third-party legal advice since inception and assurances that we are compliant,” Ryan tells Sifted. “However, it seems that the FCA’s view differed from that of our lawyers.”
An email containing a separate statement that the company sent out to customers on Sunday said that “what we do is a bit of a grey area”. It added that “we are offering administrative software and services to sophisticated and high net worth angel investors, VCs and founders who would often be doing these deals with or without us — e.g. via lawyers and email”.
The startup hopes that its services will be able to resume in the next two to six weeks. Ryan tells Sifted that it plans on addressing the issues by working with third-party partners who possess the required permissions.
Should the company decide to go down the route of applying correct permissions directly, it could take some time, according to John Pauley, partner at law firm Harper James (which is not working with Odin). “Once a firm has submitted an application for authorisation to the FCA, the FCA has 6 months to review the application or, if it deems the application incomplete, it has up to 12 months.”
Read the orginal article: https://sifted.eu/articles/micro-investing-platform-odin-told-to-halt-deals-by-uk-regulator-news/
