Crowdcube and Seedrs, two equity crowdfunding platforms based in the UK, have agreed to merge to become “one of the world’s largest private equity marketplaces.”
The terms of the deal have been agreed — Seedrs’ current chief executive Jeff Kelisky will serve as combined chief executive of the new company, whilst Crowdcube founder Darren Westlake will become executive chairman.
The merger still needs to be approved by the UK’s Competition and Market Authority, which is expected to be completed in late 2020 or early 2021.
“By joining forces, we’ll be able to harness the best of both companies as we accelerate our shared mission to create the world’s largest private equity marketplace,” wrote Seedrs’ Kelisky.
Through the merger, Crowdcube will acquire the outstanding share capital of Seedrs. Existing Crowdcube shareholders will own 60% of the combined company, and existing Seedrs shareholders will own 40% of the combined company — reflecting the comparative valuation of both companies.
The two platforms are amongst the leading equity crowdfunding platforms. Since 2011, over £2bn has been invested into campaigns on the two platforms combined and, together, they’ve secured funding for over 1,500 companies. Revolut, Brewdog and Perkbox are amongst the companies to use the platforms.
In April of this year, however, Seedrs reported seeing 20% less funding on the platform than the average across the previous three years.
“Activity, both in terms of campaigns going live and volumes of investments, has slowed a bit from what we would normally expect,” Seedrs chairman Jeff Lynn told Sifted.
“The 20% drop… was primarily from startups not going live,” he explained, with numerous campaigns perhaps anticipating reduced investor appetite.
Kelisky, Seedrs’ chief executive who will take on the same position across the merged company, said in a statement that the new company will focus on innovation and new products.
“Going forward, the combined company will aim to deliver new innovations and products that will make it significantly easier, more affordable and valuable for ambitious businesses to raise growth finance.”