Secondary Market – 2020 Year in review

Secondary Market – 2020 Year in review

8th January 2021 by Joel Ippoliti

2020 was a big year for the market with secondary transactions exceeding £1m in a single month for the first time, and the market count topping £5m in transactions across 14,000 share lots in businesses spanning the vast majority of our portfolio. 

All the while not one single business has had to lift a finger whilst their investors continue to engage in their narrative, buy and sell their investments seamlessly online and celebrate their success. We see strong evidence of the secondary market providing a compelling engagement mechanism for businesses in between primary rounds such that when it comes time to raise again (of which more than 30% of our portfolio does) there is an active engaged investor community to draw on; a fantastic additional benefit for businesses raising with Seedrs and taking advantage of our superior nominee structure.

Buyer and seller fee

In April, we introduced a buyer and seller fee which was followed in May with Revolut becoming eligible for the first time after their impressive £5B valuation. This saw a large number of Seedrs investors (and a few cheeky Crowdcube investors unsuccessfully trying to transfer their shares over to us) looking to take profit and sell to… themselves! Revolut has limited sales to existing investors only which makes these volumes all the more impressive. So whilst Revolut accounted for a large proportion of total sales in May, transactions have reduced steadily where in December’s market they account for less than 30% of all sales. We invite Revolut to release this restriction, open up their investor list to those that missed out the first time and make their existing Seedrs investors even happier!

Variable pricing

In August, we released the first version of variable pricing with the ability to list shares for sale at +/- 30% and in December we removed all restrictions which resulted in 10% more businesses being transacted per market and more sellers realising more of their profits. In December’s market our sellers made an average profit of £392 each, a massive 260% uptick verus January of this year where sellers made an average profit of £150. This is a fantastic validation of the market and a great benefit for Seedrs investors, and whilst there is more work to be done, we are delighted that returns continue to grow for those investors that invest into businesses through Seedrs.

We have big plans

Next year is going to be big. We are clearly still in Beta phase with this product, and there remain a number of opportunities; the ability to buy partial share lots; being able to buy at any time of the month; price alerts; featured secondary businesses and… honestly, the backlog of ideas we have for this product goes on and on and on! It’s easily one of the Fintech Universive’s best-kept secrets and we have every intention of doubling down on it in 2021. See you there!

Secondaries

2020 was also the year we opened secondaries to all private businesses and their investors allowing any business with direct shareholders (subject to approval of course) to run a campaign and sell to Seedrs investors under our nominee. We generated a fantastic amount of interest in this proposition, partnered with Capdesk and launched our first Secondary Campaign with Safetonet. 

Behind the glossy facade this was a complex legal and commercial integration of two platforms to deliver a scalable secondaries solution not only for Safetonet but all subsequent deals. You saw it first here and you will see more early next year as we expand the offer to include the cashless sale of employee options in even more mature and exciting businesses – watch this space for announcements. 

A raft of new shareholder propositions were released this year including: the ability for Direct investors to transfer into our nominee and; for Direct investors to list directly into our market – again you will see more of these next year as we expand our capability to serve this need.

Joel Ippoliti

Joel Ippoliti

Chief Product Officer

Digital Agency Kent