Equity crowdfunding platform Seedrs has published a portfolio update of issuers raising capital on its platform. According to the company, the 577 deals that have raised money from July 2012 to the end of 2017 have generated a platform wide internal rate of return (IRR) of 12.02%. Once you take into consideration the impact of both the EIS and SEIS tax advantages, the IRR jumps to 26.42%.
The Seedrs Portfolio Update states that the top 10% of investors who have made over ten investments have experienced an average IRR of 47.9%. For investors in the top 25%, these individuals have experienced an average IRR of 31.34%. When you take into consideration EIS/SEIS impact, the IRR increases to 62.45% and 46.74% – respectively.
Seedrs continues to work with EY to provide these reports on platform performance using the “industry-standard International Private Equity Valuation (IPEV) Guidelines.”
Jeff Kelisky, CEO at Seedrs, said their latest report is a reflection of the positive returns investors have access to in early stage private equity:
“A 12.02% platform-wide IRR is very strong, outperforming most other asset classes even before tax reliefs are taken into account,” said Kelisky. “What’s really exciting about this report is the performance of our top quartile of investors. One of our aims has always been to create a marketplace that enables investors to choose the businesses they want to back and earn returns based on how well they have selected — just as venture capital investors do. The performance of our investors shows that we are doing just that.”
Seedrs believes the dataset is indicative that Seedrs investments “have seen outstanding performance on average when compared with other asset classes.”
Seedrs notes that their previous report, providing insight into performance in 2016, was based solely on paper but with the advent of their secondary market in June 2017 Seedrs now has better perspective on valuations.
Seedrs has shared the following highlights garnered from the report:
- Across Seedrs’ 17 sectors, no one sector accounts for more than 12% of the portfolio with the three largest being Food and Beverage (11.44% of deals), Finance and Payments (11.27% of deals) and Home and Personal (11.09% of deals)
- B2C businesses make up nearly half of Seedrs’ portfolio, with B2B accounting for 30% and mixed B2B/B2C making up the rest
- Three quarters of deals funded have been through straight equity campaigns with a further 20% through their fund campaigns and the remaining handful of deals as convertibles
- The sectors delivering the strongest annualised rate of return on a non-tax adjusted basis were Finance and Payments (21.96% IRR), Home and Personal (21.78% IRR) and Programming and Security (18.82% IRR)
Jeff Lynn, co-founder and Executive Chairman at Seedrs, commented on the most recent investor results. Lynn said that one of their overarching goals is to bring data and transparency to the market for private equity that exists in other asset classes:
“Our groundbreaking series of Portfolio Updates is one example of our attempts to let investors and others quantify what is happening in our market. There is a lot more we plan to do in sharing our data going forward, but I am pleased that with this new edition of our Portfolio Update, we are continuing to push forward with our quest to rationalise this part of the capital markets.”
Seedrs shared a comment by Andrew Rubio, an investor on Seedrs and Chief Executive at a Financial Services firm:
“Investing in startups is something that has always interested me, as high-risk can equal high-return if you diversify properly. However, until Seedrs, the opportunity to invest personally in early-stage and growth ventures didn’t exist. I’m pleased to see Seedrs take investor protections seriously, offering a wide range of investment opportunities and continuing to innovate with products like their Secondary Market. The launch of this latest portfolio update is yet another example of how Seedrs is leading the way in early-stage investment, bringing a level of transparency and visibility that is so important before making investment decisions.”
To date, Seedrs has funded 680 deals and has had over £420 million invested on the platform. All investments made through the Seedrs platform offer voting shares to investors and use professional grade subscription agreements thus ensuring that investors get the same level of protection that angel investors and venture capitalists expect.