Record year for unquoted funding in the UK
While the uncertainty surrounding Brexit hampered the progress of fundraisings on the quoted markets, it does not appear to have held back fundraisings by unquoted companies. The cash raised in 2019 was well above the previous peak in 2017 even though there were fewer deals, according to Beauhurst in the latest edition of its annual publication The Deal.
There was £12bn raised, which is a 58% increase on the previous year. The number of deals fell from 1,789 to 1,751. The average investment is 61% higher at £6.8m. More cash came through crowdfunding, but the number of angel network deals fell for a second year.
Seedrs was involved in 215 deals and Crowdcube 191 deals. A greater proportion of these were seed deals. The two crowdfunding platforms both increased the number of deals they were involved in compared with the year before. During the year, SyndicateRoom changed its model to focus on an index-type portfolio model that provides exposure to a wider range of opportunities.
There was a decline in seed funding with the growth in funds raised coming from growth companies. Fintech was the sector with the main growth in deal numbers, with artificial intelligence deals also increasing. Life sciences and education technology sectors produced fewer deals. Average pre-money valuations dipped from £20.9m to £20.1m.
Network provider OneWeb raised £941m last year, while working capital finance provider Greensill raised money twice during the period and gained a total investment of £1.13bn. Deliveroo and energy supplier Ovo Energy were also in the top ten fundraisings.
Another company that raised cash last year was Faraday Grid, which was developing devices that aid electrical energy conversion by increasing the energy carrying capacity of existing networks. In January 2019, it raised £25m, but administrators were appointed in August. Online bank Loot also raised cash in the same month. The £2m did not last long and a proposed crowdfunding via Seedrs did not happen. Loot went into administration in May and closed in August.
The League of Angels and UK Investor Magazine is hosting an EIS Assembly at Royal Chelsea Hospital on 31 March (https://theleagueofangels.com/event/eis-investing-annual-assembly/). The event brings together companies and investors. There will be 20 minute presentations, workshops, 15 minute pitches and exhibition stands.
Seedrs upgrades secondary market
Seedrs is making changes to its secondary market in April following feedback from initial users. Lot sizes that can be listed on the market are being increased from £1,000 to £25,000 and relisting unsold shares will be made easier by giving investors the choice to automatically relist the shares in the next month.
A transaction fee of 1.5% each for the buyer and seller is being introduced. That includes the cost of stamp duty and registering the change in ownership. Early adopters who have bought or listed shares in the past year are being rewarded by having the transaction fee waived on their lots of less than £1,000.
Any lots submitted after 2 March will appear in the April market, which is still in Beta.
There are more changes to come, including the ability to buy a part of a share lot. There is also going to be an upgrade that will enable trading outside of the trading window.
AIM-quoted SIMEC Atlantis Energy raised £3.79m through an 8% bond redeemable in 2024 via Abundance Investment. The MeyGen tidal project developer was seeking up to £7m and has previously raised cash through two other bond issues on the Abundance crowdfunding platform. The cash will be invested in additional projects, including the Uskmouth power station conversion in Wales.
Small Robot Company wanted to raise £700,000 and it has managed to obtain £2.1m from the EIS-approved offer via Crowdcube.
Shoe designer Lucy Choi London is seeking to raise £250,000 in return for 2.7% of the company. The luxury footwear brand was set up by the niece of Jimmy Choo and the pre-money valuation is £9m. So far, £144,000 has been raised via Crowdcube. This cash will be spent on a new website and digital marketing. EIS approval is pending.
Accounts for the year to August 2018 filed at Companies House show net liabilities of £1.36m, after the profit and loss reserve increased by £560,000. Net debt was nearly £1.1m. Since then, there have been a number of share issues.
SyndicateRoom founder Goncalo de Vasconcelos has launched insurance technology company Rnwl and there are plans to offer private investors an opportunity to invest. They can register at the company website www.rnwl.co. Rnwl provides people with the opportunity to compare insurance offers when the insurance comes up for renewal. The company has gained approval from the Financial Conduct Authority.
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