Jeff Lynn, Co-Founder, Seedrs, the Fastest Growing Equity Crowdfunding Site
Jeff Lynn is Co-Founder and CEO of Seedrs, the world's fastest growing equity crowdfunding site, and was ranked number 55 in GQ magazine’s UK’s Most Influential Men earlier in the year.
Seedrs is the world’s first fully regulated online platform for investing in startups. It lets entrepreneurs seeking investment list their businesses on its website, and the public can invest modest (or large) amounts in the ones they think will succeed or maybe even be the next big thing - all through an entirely online process.
Since Seedrs launched in July last year, 21 highly promising startup businesses have secured the seed capital they were seeking and it was announced earlier this month that funding has just passed the £1 million mark. £700,000 was raised in the just the last 3 months, reflecting the rapid acceleration in growth that is underway.
One of the leading lights of the UK’s ‘Silicon Roundabout’ scene, Jeff is passionate about bringing the returns and excitement of investing in startups to a much wider audience, helping to bolster the UK’s economic recovery in the process. Jeff is American but adopted London as his home nearly a decade ago, and he believes that Britain is the best place in the world to build a high-growth, global business today.
Jeff began his career as a corporate lawyer in New York and London, and has served as chairman of the investment committee of a UK seed investment fund. He is founding chairman of the Coalition for a Digital Economy (Coadec), which advocates for digital startups and SMEs on policy and regulatory issues. He has an MBA and BCL (advanced law degree) from Oxford, a JD from the University of Virginia and a BA from the University of Pennsylvania.
We spoke to Jeff about the benefits of democratising investment through crowdfunding; the female founders who have raised investment with Seedrs; and why he believes the UK is the best place in the world to build a business.
TNW: How did you come up with the idea for Seedrs and then arrive at the decision to turn your idea into a reality?
JL: My cofounder, Carlos Silva, and I met on an MBA. We talked a lot about inefficiencies in the market for seed-stage capital, and in particular the importance of unlocking the potentially life-changing returns from investing in startups for a much wider audience than just the very rich.
After a few months of bouncing ideas around, we realised that we had come upon something that would actually be a game-changing business, so we decided to give it a go.
TNW: How does Seedrs differentiate itself from other crowdfunding sites operating in the UK, such as Kickstarter and Crowdcube?
JL: Kickstarter is very different in that no investment is involved. It is donation-based, with funders getting some kind of reward like a t-shirt, tickets to the first show, or whatever – they do NOT get equity in the project at all. As such, Kickstarter is really for creative projects for which people feel an affinity, as well as for product purchases, rather than for investing capital.
Crowdcube is an equity crowdfunding platform more like Seedrs, but the key difference is that, unlike Crowdcube, Seedrs acts as nominee shareholder for investors. This is crucial both for entrepreneurs and investors. For entrepreneurs, it means they only have one legal shareholder to deal with rather than each individual who has invested; when raising additional capital or selling the company, this is critical, as having loads of individual shareholders will often scupper a deal. And it is essential for investors, as Seedrs acts in their interests after they have invested, protecting individual shareholders from the dangers of fraudulent dilution and other things that can ruin the returns of early investors. So Seedrs really is a more comprehensive service than Crowdcube, not just matching investors and entrepreneurs but actually structuring and managing the investment in a way that works best for both sides.
TNW: Are there certain types of startup close to your heart which you especially like to see receive funding from Seedrs?
JL: We like all startups! A lot do tend to be from the digital community because that is where so many new ideas are developing these days, but we are equally pleased to see entrepreneurs from more traditional business sectors list with us. We have a business reinventing those horrible ‘Captcha’ things used on websites to prove you are a human, through to a business building sleeping pods to go in offices and airports, through to a business allowing you to rent spare space you have to people who want to store things more cheaply than what is currently available. All of these are great ideas with a great team behind them – just what you need to be attractive to investors hoping to find the next big thing.
TNW: Seedrs has made a big impact in the six months since it launched. What is next for your business?
JL: We are going to continue to push our rapid growth. We have now helped 21 businesses get the startup finding they need, amounting to a total of more than £1m invested, and the pace is accelerating.
We are attracting a fabulous stream of entrepreneurs with great business ideas and an increasing number of investors looking to build a portfolio of high-growth startup investments.
I think as more people get to see the fun and enjoyment involved in investing in startups – as well as the potential for huge returns – all made even more appealing by the world’s biggest tax incentive for investing in startups (SEIS), Seedrs could become a household name in a surprisingly short period of time.
TNW: What are your top tips for entrepreneurs looking to raise funds with Seedrs?
JL: Most importantly, they have to be willing to leverage their own networks to raise the first part of the round. Independent investors don’t want to invest in you if you can’t get your mum or your mates to put in a few quid.
We find the successful listings are generally ones where the entrepreneur actively reaches out to his or her own network to raise the first 20% or so of the money needed.
Once he or she has shown traction by doing that, the listing becomes much more appealing to other investors.
In addition, entrepreneurs need to be able to express their business idea in as few words as possible while appealing to many, including putting together a good pitch video. Making sure they are eligible for the Seed Enterprise Investment Scheme (SEIS) is also important.
TNW: What would you say to potential first-time investors who are considering investing with Seedrs?
JL: You need to understand the unique nature of investing in startups. Most will fail, but the few that succeed could provide awesome returns. So it is essential to invest in as many as you can – ideally 20 or even 50 in time – to be sure you stand the best chance of your overall returns being as exciting as they can be. As it is possible to invest as little as £10 per startup, this kind of diversification is easily achieved on Seedrs.
TNW: What are the benefits of democratising investment?
JL: It could prove to be a huge positive impact on UK economic growth, with vast numbers participating actively in growing new businesses either though investing or through their own entrepreneurial efforts.
The UK is a hotbed of great innovations and business ideas, but the problem in the past has been a lack of funding to get these off the ground.
Seedrs is all about changing that for good.
TNW: Can you give us a couple of examples of female founded businesses which have raised funding via Seedrs?
JL: ‘Something Indie’ is a great business founded by Wendy van de Weg that has recently gained its target funding through Seedrs. It is a unique online store stocking affordable on-trend high fashion items from independent brands and handmade designers. In fact, 20% of the businesses that have gained funding so far through Seedrs have female founders or cofounders, including Digital Spin, UK Work Study and Swogo.
TNW: You have been quoted as saying that Britain is the best place in the world to build a high-growth, global business today. Why do you believe this?
JL: I believe that Britain has a tremendous confluence of factors working in its favour toward producing great global businesses. Among these are some obvious ones, like the English language, a stable democracy and a strong education system, but there are also a number of more unique factors, including a deep culture and long history of global trade, the world’s most innovative financial system and a huge talent pool made up of diasporas from all over the world. Many countries have a few of these things in place, but Britain is the only one to have everything going for it.
I am a huge optimist about Britain’s ability to produce fantastic new businesses in the coming years.
TNW: What are the advantages to working in Silicon Roundabout?
JL: There is a buzz about the place which is infectious and an increasingly cohesive community of like-minded people excited about what could be started here. This all provides great support for entrepreneurs, opportunity for developers and service providers like accelerator programmes and yes, funding platforms like Seedrs.
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