Jeff LynnCEO and Co-Founder, Seedrs4 October 2012

Harnessing the Capital of the Crowds

How Small Investment Can Lead to Big Business

The Problem with Crowdfunding • It covers lots of different economic

activities:

Politics

ProfitEmotion

Consumerism

The Investment Side• It’s a subset of crowdfunding, but that

doesn’t mean much

• More importantly, it’s part of two critical evolutions• Evolution of finance – from the rich to the

masses• Evolution of the Internet – from e-commerce to

electronic finance

Startup Investing and the Masses• In the absence of online platforms,

investing in startups is limited to the rich (top 1%)

• The top 20% have investable capital• The majority of investable capital held by

individuals is held by people in the 2%-20% (mass affluent)

• The mass affluent aren’t mega-rich, but they tend to be sensible, grown-up adults who can, and would like to, invest their money as they choose

Startup Investing and the Masses• We see startups as an appealing asset

class for the mass affluent• Strong returns• 22% IRR• Average 2.2x over 3.6 years

• Risky but not complex – two very different things

• Particularly appealing in light of the alternatives

Startup Investing and the Masses• Platforms like Seedrs give the mass

affluent a chance to invest in startups

• This in turn opens a new pool of capital to entrepreneurs

Startup Investing and the Internet• In the absence of on-line platforms, it is

hard for anyone to build a portfolio of startup investments• It takes lots of time (>20 hour per deal)• It takes lots of money (>£10,000 per deal)

Startup Investing and the Internet• For startup investing to be sustainably

profitable, you need to have a very wide portfolio• Data shows the returns are strong, but

they’re skewed• 81% of returns came from 9% of startups• 56% of investments failed

• A well-constructed portfolio includes 50 investments or more

Startup Investing and the Internet• Platforms like Seedrs give investors a

way to build a portfolio of startups instead of

• This in turn allows a wider range of startups to get funded

Conclusions• Crowdfunding is great – but it’s a broad

term that doesn’t mean very much

• Investing in startups online, though, is an important development• New investors• New way to build a portfolio

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