Seedrs has been accused of betraying its own founding principles by small investors angry at the terms of the crowdfunder’s $100 million sale to a US investment platform.
The British equity crowdfunding service announced it was being acquired by New York-based Republic last week.
Seedrs has raised finance from retail investors for itself on its own platform and some of these backers accused the platform of hypocrisy as small investors are being offered different terms to larger ones. Chief among the complaints is the fact that most of Seedrs’ crowd backers are not being given the option to receive shares in Republic, while larger shareholders are. They also face a three-year wait to receive the full proceeds of the sale.
Seedrs has said one of its aims was to “democratise” investment in private companies by allowing ordinary people to invest alongside wealthy “angel” investors and venture capitalists.
“When I first joined Seedrs its basic principle was that small shareholders should be treated the same as large shareholders — ie, someone investing just £10 in a company should be treated the same as someone investing £10,000. The Republic deal is the dead opposite to this,” one backer said on Seedrs’ own investment forum.
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Jeff Lynn, executive chairman and co-founder of Seedrs, said he took “this point entirely”, adding: “Much as I am the strongest advocate of treating small shareholders the same as large ones wherever possible, I have a legal duty to maximise value for shareholders.”
The deal is subject to regulatory and shareholder approval and is due to complete early next year.
