Investing for High Net Worth and Sophisticated Investors on Seedrs

While the Seedrs story may have started in the crowdfunding of smaller companies over ten years ago now, since then, we have developed a wide range of investment opportunities that now cater to a range of different investors. With exclusive access to VC funds, and direct access to seed stage opportunities, our ever increasing investor community reflects the diversity of our offerings, with Everyday Investors, sitting alongside Sophisticated and High Net Worth investors. 

This guide will take you through the different types of investor we can accommodate, and the types of investments and opportunities available through our platform. 

The Types Of Investor

When making private investments, there are different types of investor, and rather than being defined by Seedrs, these are defined by the Financial Conduct Authority (FCA). All investors that use Seedrs will fall into one of the following categories, and certain certifications can give access to additional opportunities. 

The categories are as follows, with a detailed overview of each later in this article: 

  • Everyday Investors – anyone can qualify as an Everyday Investor
  • Sophisticated Investors – active early stage investors, with an investment in more than one unlisted company in the last two years, members of angel investment groups, directors of high turnover businesses, and private investment professionals
  • High Net Worth Investors – individuals with an annual income >£100k and/or net assets of >£250k, excluding primary residence

And, for investors outside the UK & EU:

  • Accredited in local jurisdiction – qualification criteria differ by geography

How to determine your Certification?

Seedrs is an online investment platform authorised and regulated by the FCA, so before you can make investments on the platform, Seedrs is required to ask you to certify that you fall into one of the FCA defined investor categories. 

This process is called ‘self-certification’ and is a legal requirement that must be complied with before you access investor materials and information. All Seedrs members are required to complete self-certification once every 12 months (and will be prompted to do so), but you can also change your investor category and self-certify again via your profile settings at any point. 

To comply with FCA regulations, if you are a Sophisticated or High Net Worth investor, we will request justification for your certification by asking for names of companies you’ve invested in, are the director of, or your income. 

This guide will take you through what it means to be a sophisticated or high net worth investor. 

What is a Sophisticated investor?

To certify as a Sophisticated Investor, investors must fit one of the following statements:

  • I have made more than one investment in an unlisted company, including via Seedrs, in the two years prior; 
  • I am a member of a network or syndicate of business angels and have been so for at least the last six months prior; 
  • I am working, or have worked in the two years prior, in a professional capacity in the private equity sector, or in the provision of finance for small and medium enterprises; 
  • I am currently, or have been in the two years prior, a director of a company with an annual turnover of at least £1 million.

When investors self-certify as Sophisticated Investors, they will agree to the following statement:

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means: 

  • I can receive promotional communications made by a person who is authorised by the Financial Conduct Authority which relates to investment activity in non-mainstream pooled investments; 
  • The investments to which the promotions will relate may expose me to a significant risk of losing all of the property invested

What is a High Net Worth investor?

To certify as a High Net Worth investor, investors must have an annual income of more than £100,000 and / or certain net assets of more than £250,000.

When investors self-certify as High Net Worth Investors, they will agree to the following statement:

I make this statement so that I can receive promotional communications which are exempt from the restriction on the promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me: 

  • I had, throughout the financial year immediately preceding, an annual income to the value of £100,000 or more; 
  • I held, throughout the financial year immediately preceding, net assets to the value of £250,000 or more. Net assets for these purposes do not include:

  1. 1. the property which is my primary residence or any money raised through a loan secured on that property;
  2. 2. any rights of mine under a qualifying contract of insurance; or
  3. 3. any benefits (in the form of pensions or otherwise) which are payable on the termination of my service or on my death or retirement and to which I am (or my dependants are), or maybe, entitled.

What are the benefits of being a Sophisticated or High Net Worth Investor On Seedrs?

Seedrs has a number of opportunities available to Sophisticated and High Net Worth Investors, provided that they meet the criteria above and are correctly certified. 

Open your Seedrs account today and self-certify to access private investment opportunities.

Seedrs Private Deal Room

All High Net Worth and Sophisticated Investors signing up to Seedrs are invited to join Seedrs Private Deal Room, an area of the platform reserved for correctly certified investors. 

How do I sign up to Private Deal Room?

Any new investors to Seedrs who certify as High Net Worth or Sophisticated will receive an invite to Private Deal Room via email. Alternatively, you can navigate to Private Deal Room from the website navigation, or accept your invitation here.

What investor types are on Private Deal Room?

When accepting the Private Deal Room invitation, investors can choose between being a standard member or an angel investor. 

Angel investors indicate that they are willing to invest tickets of £10k+ directly into businesses (not through the nominee), and sign an exemption to the Financial Services and Markets Act 2000 (known as FSMA). This allows us to share angel campaigns with investors which have not been reviewed using the process outlined in our due diligence charter, and places the onus on the investor to complete all due diligence and negotiate terms. 

The declaration you sign has the following statements:

  • You are a high net worth or sophisticated investor and have opted in to access the private dealroom
  • You are looking to invest £/€ 10,000 as a minimum
  • You are comfortable conducting your own due diligence
  • You are happy to represent yourself in negotiation of documentation
  • You are looking to manage your own shareholding

You can read FSMA here.

What investment opportunities do High Net Worth and Sophisticated investors have access to on Private Deal Room?

Standard Private Deal Room members can access:

  • Venture Capital funds like Passion Capital and JamJar Investments from £100
  • Investing alongside industry leaders and VCs in Syndicate campaigns from £10
  • Pre-emption allocations in Seedrs portfolio businesses from £10
  • Private share offerings from £10

Private Deal Room Angels can also access:

  • Angel investing directly into businesses from £10k

VC fund investing on Seedrs

Historically, leading VC funds have typically been highly guarded and exclusive investment vehicles with Limited Partners (LPs) that were the likes of sovereign wealth funds, pension funds, family offices and Ultra High Net Worth individuals, now more and more leading VCs are broadening their access to eligible investors on the Seedrs platform through our revolutionary VC Fund Product. 

In simple terms, this unique tool, by aggregating smaller ticket investors under a single nominee, enables LP Funds to raise a portion of their fund from eligible individual investors on Seedrs, giving these investors unprecedented access to this asset class for as little as £100 in the process.

Seedrs is the first platform to bring this kind of deal to individual investors at a low minimum investment size. We have a long history of helping funds raise money from their communities in private, including our long term partner Seedcamp which has raised a portion of their last three funds on the platform. 

In 2021, we were the first to open up a fund to the public with our partnership with Passion Capital. Passion raised more than £2m of fund 3 in an oversubscribed funding round on Seedrs, which has sparked a trend in the industry with the likes of JamJar Investments and Hambro Perks following suit. 

You can learn more about VC fund investing on Seedrs here >

Syndicate Campaigns

Syndicate campaigns are investment opportunities into individual startups, led by a lead investor rather than the issuing business. These campaigns allow individuals that have built a community of eligible investors to bring this community into deals that they’re investing in.

Eileen Burbidge of Passion Capital has used Syndicate Campaigns to pool over £1m of investment into businesses like Planera, and Roslin Technologies. 

Syndicate campaigns will typically invest in larger primary funding rounds of businesses, so investors will be buying newly issued equity to fuel growth. As these deals are not always the sorts of companies suited to raising on the main platform, investors have access to different industries and stages through syndicate campaigns.

Some syndicate campaigns will be private, and investors will only have access to invest if you’ve been invited by the syndicate lead. Others will be public, available for investment to Private Deal Room members. 

Pre-emption allocations

Pre-emption rights are included as standard in Seedrs equity crowdfunding campaigns to ensure our investors don’t have their shareholdings diluted, and can participate in follow-on funding rounds (see explainer article here). In many cases not all the pre-emption allocation rights are exercised by investors leaving limited allocations available. These limited allocations in Seedrs portfolio companies are available to eligible investors on Private Deal Room.

An example of a limited allocation pre-emption round is Oddbox. After two successful equity crowdfunding raises on Seedrs, in August 2021 Oddbox raised a £16m Series B round, at a valuation of over £100 million, a significant uplift from their last equity crowdfunding round.

As not all previous investors exercised their pre-emption rights, Private Deal Room investors were able to participate in Oddbox’s Series B fundraise, an opportunity that wasn’t available anywhere else.

Angel Investing on Seedrs

Angels can invest tickets of £10k and more directly into businesses, typically at pre-seed and seed stage, through Introducer Campaigns on Private Deal Room.

Whilst Introducer Campaigns are available to view on the platform if an investor has opted-in, the investment takes place offline. The funding round’s terms are not set, and it is up to the investor and entrepreneur to negotiate directly. This allows investors to take a far more meaningful and collaborative role in the growth of a startup than might happen during a typical Seedrs equity crowdfunding investment.

Introducer Campaigns can also be used to help a company anchor a funding round before offering to the wider Seedrs investor base, or to generate the traction needed to begin tapping into Seedrs’ network of VC and Institutional partners.

Introducer Campaigns provide investors with the company’s pitch deck and supporting documents, as well as a brief company summary. Investors can request an introduction to the company, conduct their own due diligence, and invest in the company directly, outside of the Seedrs nominee. 

Private offerings

These opportunities provide investors access to share sale allocations in later stage, pre-IPO companies, typically from Series B and above. With large companies trending towards staying private for longer, these Private Offerings allow eligible investors to access allocations in pre-IPO companies, regardless of whether they’ve used equity crowdfunding in the past.

The pitch is not visible to the general public, and will also likely include less detail than one would expect from a typical Seedrs crowdfunding campaign. All information provided will still be verified by Seedrs, unless stated otherwise within the campaign, however investors will need to conduct their own due diligence, prior to making an investment decision. 

Open your Seedrs account today and self-certify to access private investment opportunities.

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