With over £40 million invested through their platform, P2P mortgage lender Landbay have played a significant part in the alternative finance boom we are witnessing in the UK. We spoke with CEO and co-founder John Goodall about how Seedrs has helped them achieve growth from growth idea-stage startup to fintech powerhouse.
In recent years, alternative finance has become one of the fastest-growing industries in the UK. Only a few years ago it would have been unusual to see an advert for a peer-to-peer (P2P) business, crowdfunding platform or invoice factoring company on public transport adverts; now it is commonplace. In 2015, the industry grew to £3.2 billion, and Landbay has become one of the major players within the industry since its launch.
Landbay is a peer-to-peer lending platform for residential buy-to-let mortgages that match investors with borrowers. In 2015 Landbay was the fastest growing UK P2P platform, and growth is expected to continue this year with the launch of their strategic partnership with Zoopla (also Landbay shareholders). To date, they have successfully raised eight investment campaigns on Seedrs. The combination of an innovative business idea, experienced team and strategic planning have enabled Landbay to successfully raise over £2.6 million – with more than £1.6 million in their largest single round – from investors on the platform since 2014.
When John was initially looking at financing options, equity crowdfunding seemed like the obvious choice admitting, “We needed to grow our network as quickly as possible, and the benefit of using Seedrs is that you get access to a broader network of users for your business. As well as raising capital for your business, you have a greater pool of people you can test things out on when you launch.”
John and his co-founder Gray Stern considered a number of equity crowdfunding platforms before choosing Seedrs. “The thing that particularly appealed to us about the Seedrs model was the nominee structure,” John said. “All the shareholders’ rights are protected in one entity. For us as a business, if we need to discuss something we can discuss it directly with Seedrs. From an entrepreneur’s perspective that’s a lot easier.”
As with all entrepreneurs thinking about their future growth rounds, John was also keen to ensure that the people investing in Landbay were going to be protected. “From an investor’s point of view, Seedrs will uphold their rights and get the same shares as I have, so everyone is equal.” The Seedrs nominee structure is one of the most cited reasons for joining our platform. As an experienced businessman, John realised that without this structure in place it would be extremely difficult to raise further funding rounds from institutional investors, who are often wary of businesses with a large or complex group of shareholders. With Seedrs, investors’ interests are administered together under the Seedrs nominee, so entrepreneurs only need to deal with one entity for formal matters when moving forward. Investors can still exercise their votes, but this administrative structure makes it simple for businesses to focus on running their business and growth while we ensure investors are looked after.
To read more about the importance of our nominee structure, and the services it allows us to provide entrepreneurs and investors, you can read our article here.
Having completed so many rounds, John has noticed a significant shift in the types of people investing in Landbay as the business has grown. “Our first two rounds consisted predominantly of friends and family, as well as Seedrs users making small investments. Then we did an institutional round where two institutions invested £1.5 million. During our final round, we have had a combination of institutional investors, angels and Seedrs users.” As the Seedrs network continues to grow, we are seeing a broader group of investors registering and diversifying their portfolio of investments.
When asked to give one piece of advice for anyone looking to raise capital through equity crowdfunding, John reminded entrepreneurs that “your responsibilities don’t stop when the campaign stops; your investors are shareholders for life and you should engage with them both as shareholders and potential users of your business.” If you are running a business with a large number of potential users, equity crowdfunding can be a great way of both increasing the awareness of your business, as well as raising capital. Landbay has attracted a total of 635 investors in their eight rounds of funding, many of whom have now become active investors on the Landbay platform itself. John engages with his investors via the Seedrs post-investment area regularly to keep his investors updated about the development of the business, which not only keeps users interested in their Seedrs investment but also encourages them to sign up to Landbay.