Seedrs Blog

Deeper dive into the Seedrs Secondary Market

Deeper dive into the Seedrs Secondary Market

15th May 2017 by Thomas Davies

Since announcing our upcoming launch of the Seedrs Secondary Market we’ve had an amazing response from both investors and entrepreneurs. We are very grateful for all the positive feedback we’ve received so far.

The Seedrs Secondary Market represents the launch of our formal secondary market, however we have been supporting investors transferring shares between themselves for a few years. To date we have completed over 200 trades, with the first trade occurring back in 2014.

The implementation of a secondary market for private shares is actually quite complex. This is why it doesn’t really exist in any meaningful way yet. The market needs to work for buyers, sellers and entrepreneurs, and it can be difficult to balance all the parties’ interests. We could have rushed a simple notice board for investors a long time ago, but we know that would be a terrible experience for everyone. So we decided to do it properly.

We have spent a lot of time working through the issues surrounding a secondary market, designing a model that we believe addresses the key concerns that our customers may have, whilst also allowing the market to operate in the most efficient way. It is important to note there will be many iterations of this product once our beta version is launched, with new features and capabilities introduced over time based on feedback and data.

We understand that some investors will find our beta launch a little limiting with only current shareholders in a business eligible to buy shares, or the fact the price of a share is set at the ‘fair market value’. There are reasons why starting with these features helps protect both the buyer and seller in the market, and given the amount of feedback and questions we’ve had regarding these topics we’ve decided to create a series of videos focusing on four key areas.

These will cover:

  • What are Trading TuesdaysSM and why only one week per month?
  • Who can buy shares and why?
  • What is a fair market price and why is there no bidding yet?
  • Why does the Seedrs nominee structure make it easy for the market to work?

We hope you find the series helpful, and we look forward to hearing your feedback and answering any questions that you may have. If you’d like to be sent updates as we draw nearer the launch, please sign up for updates.

Please note that investing involves risks, including loss of capital, liquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio. Not all shares will be eligible for the Secondary Market and, even if they are, the ability to buy and sell shares will depend on demand. Investors should not assume that an early exit will be available just because a secondary market exists.

Thomas Davies

Thomas Davies

I'm the Chief Investment Officer for Seedrs.

  • Tim Peppiatt

    Short instructional videos is absolutely the way to disseminate the Seedrs message.

  • mount

    Hi, will it be possible for funded companies to derogate from the secondary market? For example can I stop my shareholders (call them ‘partners’) from selling their shares on the secondary market, for example create lifetime partners? I know it is a strange question, thank you.

  • seedrs

    We require companies that raise on Seedrs to generally allow their investors to transfer their beneficial ownership rights via the Seedrs Secondary Market. We would not agree to a blanket restriction on a transfer of shares.

    However, funded companies are able to opt out of certain secondary trading windows – for example if they are in the process of raising another round of finance or are about to announce something that could lead to a valuation change. Hope that answers your question @disqus_Nfc5UsHiuO:disqus

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