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Seedrs is a UK registered equity crowdfunding platform. While investments in start-ups are usually offered on German platforms in the form of loans, you get at Seedrs just shares (shares / shares) in the company. Since the startups are not listed companies, these shares cannot be traded on the stock exchange and are therefore relatively illiquid. In other words, there is a risk that as an investor you will not be able to sell the shares, even if the investments are performing well. Nevertheless offers Seedrs In my opinion, as a platform, it is the most attractive model overall for investors to invest in young companies. My experiences on German platforms such as Seedmatch and Companisto were mixed: With Seedmatch, two of my 11 investments have developed very well and there is still a chance that two will develop well in the future. I had a total of 43 investments on Companisto, one of which had a good exit and the other 42 are either broke or no significant return can be expected. Companisto has meanwhile changed its own participation model and offers investments as equity participations; however, the minimum investment size was increased to EUR 1000 per company. This is no longer classic crowd investing. Because the ticket size does not allow the average person to build a diversified portfolio of several dozen holdings. In my view, however, this is important in order to spread the risk. Likewise, only a small part of your own assets should flow into high-risk investments such as crowd investing.

Platform language English
Since Seedrs is a UK platform, all company information and contract texts are also presented in English. Since I have lived abroad for a long time and also mostly communicate in English in my full-time job, English is like a second mother tongue for me and I understand well and with all the details what I am investing in on Seedrs. I recommend any potential investor to ensure a good understanding and when in doubt, do not invest. If you have any general questions, feel free to contact me and I will consider frequently requested topics in future blog posts. But I give No way Recommendations for or against specific investments or investment classes. This is always the sole responsibility of the investor. If in doubt, I recommend seeking professional investment advice in advance.

Regular follow-up financing and pre-emption rights
Most startups in the UK require several rounds of financing before they become sustainably profitable and can continue to grow on their own. Therefore, many of the companies carry out follow-up financing approximately every 9 months to 2 years. Depending on the development of the startup, the share price changes – usually upwards. Here, every investor must assess whether the key figures (total sales, profit/loss, user growth, sales per user, further development of the product range, listing extensions, etc.) are developing in the right direction and whether the new share price is therefore appropriate for follow-up financing. In the follow-up financing, new shares are issued, as in the case of a capital increase in a public limited company. As a result, the enterprise value is divided among more shares as a result of the new financing, and the shares are thus diluted by the new issue. As a result of the capital increase, the percentage share of companies decreases for the individual investor if this investor does not also invest again.

One advantage of Seedrs is that you usually have pre-emption rights, i.e. the right to participate in follow-up financing and to buy at least enough shares so that you continue to own the same percentage of the company as before. In some cases, it is agreed in the subsequent round that existing pre-emption rights will be overridden so that subsequent investments cannot be made. Then the only option is to buy it later on the secondary market (see below).

Longer participation in the successes of winning startups
A major advantage of shares is that they do not have a limited term like loans. This means that you can usually remain invested in the successful winning companies for longer (unless there is a (partial) sale of the company, in which case you may be forced to sell your shares as well). From the point at which it is clear that the company has a good probability of being able to survive in the long term, the risk of total loss has diminished. The longer one can hold such a company, the higher the chances of further long-term earnings growth or additional dividends. With young companies, however, dividends are not to be expected for many years, since the profit is invested in further growth (and thus an increase in company value). In my best investment on Seedrs, the share price has increased more than eightfold in two and a half years. The example mentioned is a very positive exception. Very few companies will do this so quickly and so successfully. But it is precisely these multiplications that are necessary in the long term so that, including the normal insolvencies, a good overall return can be generated.

Startup reports for corporate development are an essential pillar of my investment strategy. I often invest under £100 initially and then see how well the founders communicate with investors. Sometimes you experience exemplary communication and regular updates every two months, naming hard facts and key figures that are developing well. Sometimes there are only quarterly or semi-annual reports or companies think they don't have to communicate with their investors. The reason given is often that one has to reckon with the fact that competitors are also investing and could otherwise read sensitive data. All alarm bells go off for me with these arguments. Even if I can understand the argument, I will usually not continue to invest in a black box. I often make an exception to this when professional investors are on board, so-called venture capitalists/ VCs. More on that later in this post.

Companies House is the name of the business register in the UK where companies publish their annual accounts. This can be viewed free of charge, but unfortunately only with a considerable time delay, since reports are usually not published until about 9 months after the end of the financial year. The turnover can only be read from this in the rarest of cases, but the profit/loss can usually be roughly estimated and thus also the development of whether the company is becoming more profitable (or less unprofitable).

When and how does the share price of a startup change?
Seedrs uses a fair value policy (available directly from Seedrs) where the share price is only adjusted when new shares are issued at an updated valuation. In contrast to shares, the share price usually remains the same until follow-up financing or business closure and does not change regularly. This can lead to the valuation becoming further decoupled from the company's development. This can be positive if, with (or despite) good development of the startup, you can still buy shares (on the secondary market) at the price at which a financing round was closed a long time ago. But this also means that a startup can develop excellently for years and you don't see any change in the share price. In the long term, I would always assume that I will finally have the chance to participate in the good business development - whether through a voluntary buyback offer, an IPO or a company sale.

Liquidity and share increase via the secondary market
A major advantage of Seedrs is that most startups participate in the secondary market. As an investor, you can offer shares for sale on a monthly basis or buy them yourself. This only works if the startup is "eligible", i.e. authorized for the secondary market. Seedrs deactivates companies from the secondary market as soon as information is available that could have a lasting effect on the value of the shares. So if Seedrs already knows that a company will go out of business, but this has not yet been communicated, it would be set to ineligible, for example. Companies are also excluded if follow-up financing is carried out promptly and the valuation could change as a result. Selling only works for eligible companies if another user buys the shares from the old investor. Especially for startups that are developing well, there are good chances of finding a buyer in the medium term.

For me, the biggest advantage of the secondary market is that I can buy companies that have proven themselves. If a company's KPIs are moving in the right direction and the startup's communication is good and open, I often invest in the secondary market.

Seedrs has recently introduced fees for using the secondary market, which also have to be taken into account.

Invest in startups together with venture capital companies (VCs).
In addition to crowd investors, companies are also looking for financing from professional investors. Professional VCs regularly get involved, especially with companies that have already developed positively and call for higher valuations from GBP 10 million. They usually expect to at least triple or even increase their investment within a few years.

The main advantage of a VC investment is that the VC has all the detailed documents from the start-up and, of course, carries out a thorough examination in its own interest before investing a few hundred thousand or even millions of GBP. Thus, for me as a crowd investor, the company valuation and the business model of the company have already been checked by a third party and found to be good. This makes inflated valuations less likely. Especially when VCs are on board, there are sometimes less frequent or less open investor reports to the crowd investors. As long as the VCs are involved again in subsequent rounds, I often reinvest despite limited information and evaluate the VC investment as such a positive indicator that I can join in with a clear conscience without having complete information.

Here, too, there are special cases to be considered, because, for example, VCs often require their own share class for their commitment, which, for example, is paid out first in the event of a sale and/or guarantees a multiple (e.g. 3x) of the investment. Depending on the exact constellation, as a crowd investor you can also receive these preference shares or, unfortunately, you receive another share class that does not have these special rights. It is therefore important to read and understand the conditions carefully in advance.

What does it cost me as an investor to use Seedrs as a platform?
Participation in the platform is free for the investor. Deposits and withdrawals are also free. For the currency exchange between EUR and GBP, a fee of approx. 0.5% is charged per change (or you can transfer GBP directly from Revolut to Seedrs). Seedrs receives a commission from the startups for conducting the financing rounds. Seedrs receives a fee (English "Carry") of 7.5% on generated profits of the investor. This commission only accrues when shares are withdrawn from the portfolio at a profit. What I find positive about this structure is that Seedrs only receives the carry on investor profits. This ensures that Seedrs has an interest in investors generating long-term profits. The interests of the platform and the investors are thus already coordinated via the fee structure. In addition, a fee of currently 1.5% each applies to both the seller and the buyer for the purchase and sale of shares on the secondary market. Participation in the secondary market is voluntary and offers a lot of advantages that are not available in this form on any other crowd investing platform (that I know of). In my view, the entire fee structure is fair.