You win some, you lose some - it's the name of the game

  • SEEDRS published a detailed report of its entire equity crowdfunding history on September 7, one day before the deadline closed for submissions to the FCA for its ‘post implementation review of the crowdfunding rules’. Coincidence or not, hats off to the company for producing the first set of meaningful statistics for a sector that has never made any secret of its high risk/high reward proposition.

    The report reveals that 47, or 18.6%, of 253 companies for which it raised money went bust. A failure rate of almost a fifth is undoubtedly a high proportion, but it doesn’t quite look so alarming if you consider the flip side – that over 80%, or four fifths, of these young companies and start-ups are still going. You might even argue that it’s quite impressive.

    The stats also show that the average investment return (net of fees) has been 14.4% per annum, albeit that this is a notional or paper profit because none of the shares has actually been sold yet at these estimated valuations. But it becomes mind-boggling when, as the report shows, the 14.4% return soars to 43.3% once the appropriate tax reliefs (e.g. EIS) have been applied. Small wonder that traditionally conservative investors, offered next to nothing by the banks for their deposits, have been casting aside their inhibitions. And that’s just the averages. If you had invested in some of the best sectors – for example, food and beverages – the notional return could have been nearer 23%, or almost 50% after tax reliefs.

    As SEEDRS points out, theirs is an unfolding story, but all they can reasonably be expected to do is to tell the world what has happened so far, warts and all. Maybe some people should not be tempted into this type of speculation, but surely it is better that, with suitable caveats and clear warnings, they be given access to an asset class that historically been the preserve of the venture capitalists, institutions and HNW investors.

    The trick, if there is one, is to create a diversified portfolio, just as the professionals do, with the aim that the returns generated by a few good ones will outweigh the losses from the failures. You win some, you lose some. Do we really need ‘nanny state’ legislation to spell out what sophisticated and high net worth investors already know?

Related articles

  • Read More

    Peer to Peer featured in Queen's birthday honours

    Good to hear that the pre-eminent pioneers of P2P lending in the UK are receiving formal recognition for their outstanding achievements. Described an a ‘Peer to Peer and Financial Inclusion...

  • Read More

    New Fintech Collaboration: Xero + Liberis

    Liberis, the card based finance provider, has announced an integration with Xero, the UK's leading online accounting software, to improve small businesses’ access to capital and credit....

  • Read More

    Consumer debt rises while businesses save

    Soaring levels of consumer debt are evidently causing the Bank of England, the Government and others in authority some sleepless nights. According to a recent report in The Guardian, the number of...

  • Read More

    Liberis and Sage launch Sage Pay Business Finance

    Sage Pay has teamed up with alternative business finance provider, Liberis,to give Sage customers access to flexible financing for the first time....

  • Read More

    ArchOver receives FCA authorization

    ArchOver, one of The Marketing Eye’s longest standing clients in the alternative finance sector, has been granted full authorisation by the Financial Conduct Authority (FCA). The news represents a...

  • Read More

    Australian Budget sets scene for FinTech growth

    The latest Budget statement from ‘down under’, on May 9, reaffirmed the Australian Government’s intention to turn the continent into a global fintech centre....

  • Read More

    FinTech as a force for good

    Kids, they say, grow up quickly and nowhere is this more true than in FinTech. Barely five years ago, the phrase wasn’t even invented. Now it is the collective noun for billion dollar enterprises,...

  • Read More

    What is a bank?

    One of the recurring themes at this year's AltFi Europe event, organised by the excellent AltFi team, was a quest for the definition of a bank, or more particularly a bank of the future. Is it any...

  • Read More

    Giles Andrews' appointment marks another step on P2P’s road to maturity

    Students of the history of finance may one day look back on Giles Andrews’ appointment to the Chair of MarketInvoice (MI) as a major milestone in the evolution of the P2P sector....

  • Read More

    New community for Bank of England’s FinTech Accelerator

    The Bank of England has made steps towards improving relations between itself and the Fintech sector with the launch of its new community. The community intends to bring the Bank and Fintech-related...

Take the first step

To find out more about how we can help you grow faster, please get in touch. We'd like to hear from you.  Or try our instant marketing healthcheck, it's free!

Quick Contact

Quick contact


Contact us

T 01825 765617


Our offices

Full details of our offices in London and Uckfield more

Request a call

'; ';