When we launched our Secondary Market, we fired the starting pistol on a move away from a crowdfunding-only platform toward a private company marketplace.
The Secondary Market allows shareholders to list and sell their shares in private companies. Back in 2017, the Market operated on a fixed pricing model and was only open to our portfolio companies. We purposely limited ourselves in order to test, iterate and build a scalable, liquid marketplace.
Now, the Secondary Market is well and truly open for business. Private companies who haven’t raised on Seedrs before can list existing shares and give shareholders liquidity.
We’re unlocking a world of financial opportunity for founders, employees, and early investors.
A Marketplace With Liquidity
The first key thing we have in 2021 is liquidity.
Over the past few years, we’ve been gradually iterating and making small tweaks to our Secondary Market. We’re trying to help investors overcome the legal, financial, and technological hurdles to seeing a return on their investments.
It’s been 4 years since launching our Secondary Market, and we’ve helped shareholders sell over £10m worth of shares in private companies. This is in addition to the £1 billion we’ve helped companies raise in total.
£2m of those shares were sold in the first 2 months of 2021 alone, after trading an average of £500k per month in 2020.
This upward trend proves there is a rapidly growing interest in secondary share sales on both sides of the market.
Finding liquidity is always the biggest challenge for any marketplace. The growth rate of the Seedrs Secondary Market should provide selling shareholders confidence.
A Simple Way To Execute
One of the biggest innovations we’ve seen is the simplification of the legal process for shareholders.
When we created the Secondary Market, it was initially limited to portfolio companies. In part, this was because we act as a nominee investor in each company. This means that we can execute trades within the nominee, and we don’t have to do anything complicated whenever shareholders want to sell.
In the years since launching, we saw increasing demand from companies wanting to bring other shareholders under the Seedrs Nominee. A lot of CEO’s and CFO’s want to simplify and clean up their cap-table. So we’ve built a feature that does just that.
This now allows us to host share sales for shareholders who might not have invested initially on the Seedrs marketplace.
Last year, we partnered with Capdesk. This tech-enabled partnership makes the listing and sale process even easier for shareholders looking to sell their holdings.
We now have a simple process that enables us to execute share transfers for investors in any private company in the UK (and soon, in Europe).
A huge step that we needed to overcome to make the Secondary Market universal.
What’s more?
This partnership with Capdesk allows us to do something really cool.
Companies now have the opportunity to allow their employees to sell some or all of their options via a cashless sale. This means private companies can reward and motivate their team with cash while building a community of new investors.
All without needing to issue any fresh shares, and without employees needing to finance their options exercise.
A Proven Track Record
Companies such as Revolut and Cheeky Panda have been very popular. Since their 2017 Seedrs campaign, Revolut trades have been netting investors up to a 1300%* return.
And in February 2021, more than £2m of Cheeky Panda shares were bought by over 1,100 investors at a 20% premium to their last round. This was through a grouped offering involving the founders and early shareholders.
We also saw SafeToNet combine a primary fundraise with a secondary share sale in August 2020. This gave their founders and early-backers some well-earned liquidity.
We’re seeing that interest in investing in top-quality startups is higher than ever. A secondary share sale by a high-growth private company can expect to receive the same interest as a primary share offering.
To cap it off, we’re soon launching our first-ever employee options share sale. We think this will be the start of a game-changing approach to employee benefits and retention.
The Seedrs Marketplace is well and truly open for business, for both primary and secondary share sales. Any private UK company is eligible to apply for listing. If you’d like to learn more, get in touch today.
*The performance of the investment set out in this article refers to the past, and past performance is not a reliable indicator of future results. As such, this is not an indication of the performance of any other investment opportunity on Seedrs. Returns were calculated using unaudited accounts and are inclusive of fees.
