Secondary Market – April Update

Secondary Market – April Update

23rd April 2020 by Joel Ippoliti

April was Seedrs largest market to date with a record £246k worth of shares sold. It marked the release of three significant changes: a fee added to both buying and selling journeys, auto relisting as an option when listing sharelots and the removal of the £1k sharelot cap. 

Our expectation was that with the downward pressure of the Easter holiday and the pandemic we would have a quieter market. But it was apparent that the removal of the £1k limit was a countering force with 25 sharelots selling above £1k, the largest being £25k (the upper limit). 

The sharelot sales volume by price tier is broken out as follows:

The 25 lots above £1k all attract stamp duty, the process to file them with HMRC is usually rather archaic involving PDF forms, self-addressed return envelopes, stamped forms and paper filing. Luckily, due to the pandemic (whoever said that!) HMRC relaxed their process and allowed us to email in completed forms as an exception saving a few stamps in the process. Nevertheless, we’re part way to automating the process (at our end) and are confident we can remove most of the manual work as the volumes increase. 

There remains strong sell-side demand in the market with over £2.7m worth of shares submitted for sale and £1.2m listed (the difference being due to ineligibility). The £1.2m that was listed was split out across 3,006 lots, of which 991 were sold.

So we ended with a clearance rate 17% by value (1.2m listed, £246k sold) and 30% by volume (3006 lots listed, 991 sold). We saw 323 sellers and 411 buyers across 157 businesses.

These sales can be broken out by sector as follows:

…and values by business as follows:

Overall, positive transaction volumes based on previous markets, especially considering factors out of our control at the moment but we’d like to do more to increase the clearance rates. 

Every market we try to release improvements to the experience, some smaller and some larger depending on our other priorities. We are broadly on a path to release larger changes in the following order (all of which are designed to increase clearance rates):

  • Partial sharelots – allowing buyers to offer to buy smaller ‘pieces’ of a sharelot
  • Allowing buyers/sellers to connect anytime (even when the market is closed)
  • Allowing buyers/sellers to place bid/ask notifications and price negotiate

A required mechanic for partial sharelots is being able to ‘lockout’ a checkout journey once it has started. There are some risks to not implementing this properly, namely the ability of one buyer to lock out multiple sharelots and effectively block other buyers. We’ve held off on implementing this but it is likely this will be our next ‘larger’ release and will proceed partial sharelot sales. 

We also try and make smaller usability changes to the experience in each market with some smaller ones earmarked including:

  • Remembering filter settings as you navigate from business profile page back to market list;
  • Providing a link to “how it works” when logged in (currently disappears on login)
  • Making it clearer where the eligibility help article is to explain what “ineligibility” means
  • Creating an on platform alert to notify a seller they must confirm their sale

I will share more on the roadmap in the next update and how the latest releases are performing. 

For May’s market we already have £2.1m worth of shares submitted for sale (over 50% submitted from the new auto relist feature) and there still hasn’t been a price update through for Revolut, after which we expect another increase in submitted volumes – so we are looking forward to another positive market and a few more usability kinks being ironed out.

Joel Ippoliti

Joel Ippoliti

Chief Product Officer

Digital Agency Kent