Crowdcube and Seedrs merger investigated
Crowdfunding platform Crowdcube is planning to merge with rival Seedrs. The plan is to become a major player in the European market.
The two platforms have raised £2bn over the past decade. Crowdcube will acquire Seedrs and its shareholders will own 60% of the enlarged business.
Seedrs chief executive Jeff Kelisky would take on that role in the merged entity and Crowdcube’s boss Darren Westlake would be executive chairman.
The Competition and Markets Authority (CMA) has fast-tracked the proposed merger to an in-depth phase 2 investigation. The deal will not be completed until early next year even if it is allowed.
This should enable the review of the merger to be completed more quickly and an early decision made on whether there are any competition concerns. Crowdcube and Seedrs are the two largest crowdfunding platforms in the UK and they have a substantial market share. The concern is that small businesses will have less choice when it comes to seeking growth investment.
Since the start of 2020, more than £9bn has been raised by private UK growth companies. The average size of deal is increasing. In the fourth quarter it has been £11.3m, compared with an average of £6.49m for the year so far. The largest fundraising in the fourth quarter was £266m by fintech Molo Finance.
Online fundraising platform operator PrimaryBid secured a $50m cash injection having shown its success in raising cash for quoted companies during the Covid-19 lockdown. Investors include the London Stock Exchange and AIM-quoted venture capital investor Draper Esprit, which co-led the latest fundraising.
Prior to this year, PrimaryBid had predominantly offered small investors access to placings by AIM-quoted companies via PrimaryBid.com, but this year there have been offers by much larger companies, including online shopping technology developer Ocado and caterer Compass.
PrimaryBid, which launched in 2015, already has commercial agreements with the London Stock Exchange and Euronext, which covers nine markets in Europe. In September 2019 it raised $8.6m from outside investors. The latest cash will provide the finance for PrimaryBid to expand outside the UK. Other agreements with stock exchanges are likely to follow.
Tellworth British Recovery and Growth Trust failed to raise the cash it was seeking. It wanted to raise up to £100m via a placing and intermediaries offer at 100p a share and PrimaryBid was offering the investors the chance to subscribe.
Esports company Fnatic is raising cash through Crowdcube, following a £7.5m fundraising headed up by venture capital firm Berengea. Another £1m should come via Crowdcube. The offer closes on 7 December. Shoreditch-based Fnatic has brand partnerships with BMW and Gucci.
Fundraisings by seed-stage businesses has fallen by one-third in the US this year and the SEC is set to increase the amount that these companies can raise via crowdfunding from $1.07m a year to $5m a year.
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