Platforms for equity crowdfunding have been gathering steam among retail investors as a source for them to invest in promising startups. Taking what can be described as a different approach than many of their peers in the UK is SyndicateRoom. The company aims to combine the benefits of retail crowdfunding but also add elements that are used by professional angel investors. As such, while open to retail investors like rivals Seedrs and CrowdCube, it differs in that companies raising funds on SyndicateRoom don’t approach the crowdfunding platform directly but are introduced by lead investors.
Describing their unique selling point, Goncalo de Vasconcelos, CEO of SyndicateRoom stated at an investor presentation last week that he created the firm because “I didn’t like the way it was being done”, reffering to equity crowdfunding. He explained that in contrast to business angels where deals were investor driven, crowdfunding platforms were company led, with them dictating the terms of the fundraising. As a result, De Vasconcelos, believed that investors on crowdfunding platforms aren’t sourcing the best opportunities for their funds. By using a syndicate driven model and adapting it to the retail equity crowdfunding market, SyndicateRoom believes they can harness the power of the crowd to benefit firms raising and investment, but achieve better terms for the platform’s investors.
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The comments by De Vasconcelos were part of the firm’s investor presentation titled ‘Hype or Hit: What’s next for Crowdfunding’ which also included participation from SyndicateRoom’s lead investor Jonathan Milner and Andy Davis, former editor of FT Weekend. The evening culminated in SyndicateRoom announcing that it was starting a crowdfunding campaign of its own on its platform, with Milner as its lead investor.
Launching its campaign on Thursday night, SyndicateRoom hits is funding goal in less than 48 hours. According to terms of the deal, SyndicateRoom raised £1.2 million, with 14.12% of equity being offered and a pre-money valuation of £7.3 million. Overall, 201 investors participated in the fund raising campaign, which was limited to £5000 investments for general account holders to allow for wider participation of SyndicateRoom’s user base.