seedrs vs crowdcube
Every entrepreneur understands that financing is critical to a startup’s early-stage company’s survival and growth. The good news is that there are several options for obtaining finance for your company. You can use traditional bank financing or a more innovative technique such as crowdfunding.
Crowdfunding is a way to generate money, promote awareness, open debate, and build social media capital all at the same time. Entrepreneurs have a lot of options when it comes to crowdfunding platforms.
Seedrs and Crowdcube are the two largest equity crowdfunding platforms in the United Kingdom.It is common to ask, “How do the platforms differ? Is one platform better than the other?” Everything will be broken down for you. Keep in mind that, as Crowdcube partners, we strive to provide balanced information across all platforms. See the difference between crowdcube and seedrs.
Seedrs Vs Crowdcube
Seedrs facilitated 134 deals in 2016, while Crowdcube enabled 124, according to research dubbed The Deal. Between January and December 2016, both platforms accounted for over 86 per cent of all equity crowdfunding activity in the UK.
While this gives us an idea of how effective both platforms are, we’re here to dissect the significant distinctions between them.
|Investors pay the platform 7.5 per cent of their revenues only when the campaign is successful.||Investment cost of 1.5 per cent (limited at £250)|
|Management and administration fees are not paid by investors.||Crowdcube charges only the funds that are successfully raised a 7% success fee.|
|Seedrs charges a 6% success fee plus a 0.5 per cent payment processing fee to campaigners. In addition, there is a £2,500 finishing fee (excluding VAT).||A completion fee of 0.75 per cent to 1.25 per cent of all cash raised is charged. Payment processing fees at Crowdcube range from 0.47 per cent to 2.9 per cent.|
|Class A shares are not available on the platform.||Class A shares are available on the platform.|
|The Seedrs Private Live round lasts 14 days and there are no alternatives for extension. The platform’s Public Live period is 40 days long, with opportunities for extensions.||Crowdcube offers a 30-day Private Live round that can be prolonged, as well as a 30-day Public Live round that is rarely extended.|
Seedrs Vs Crowdcube: Approval By The Financial Conduct Authority (FCA)
Companies that provide financial services of any type in the United Kingdom must be authorized by the Financial Conduct Authority (FCA). It is self-contained and autonomous of the government, with the following primary goals:
- to safeguard the integrity of the UK financial system; to ensure an adequate degree of consumer protection; and to promote effective competition in the interests of consumers
- Seedrs and Crowdcube are both FCA-approved. Seedrs is also a market pioneer, having developed an FCA-approved test that potential investors must complete before investing on the site.
- This concept has been taken by Crowdcube, which has developed a questionnaire to determine whether a potential investor understands the substantial risk of investing in start-ups and early-stage enterprises.
Seedrs Vs Crowdcube: A Model for Overseas Operations
Both platforms are attempting to expand their reach overseas. In the nations where it intends to operate, Crowdcube links up with local partners. Seedrs, on the other hand, administers all international investments from its London-based platform, ensuring that all transactions take place in the United Kingdom.
Deal Structure: Seedrs Vs Crowdcube
The contract structure is arguably the most significant distinction between Seedrs and Crowdcube. Seedrs has adopted only a nominee structure model, whereas Crowdcube combines both a direct ownership and a nominee structure model.
When you invest in a business using the direct ownership model, you become a direct stakeholder. Your ownership percentage is determined by the amount you invest in the firm and the stock it offers in exchange for that investment. As a result, you’ll get a Share Certificate and your name will appear in the company’s stock record.
Seedrs’ nominee structure approach means that the platform holds the legal title to shares in a certain firm for the benefit of those who invested in it. Investors own the entire economic stake in the shares, even though they have no voting or direction control over them.
Overall, the two most popular equity crowdfunding sites in the UK follow two distinct strategies. Both Crowdcube and Seedrs are excellent fundraising platforms; hopefully, this has given you some perspective into which is ideal for your campaign.
Are you thinking of starting a crowdfunding campaign on Crowdcube or Seedrs? ONPASSIVE can assist you. Contact us.