Seedrs has published its first ever portfolio update which reveals that for the first time, on a fair value basis, equity crowdfunding through the platform has produced better annualised rates of return (IRRs) than most other asset classes.
The update looks at the characteristics and performance of the 253 deals funded on Seedrs platform between its launch in July 2012 and the end of 2015.
It finds a platform-wide IRR of 14.44 per cent, which increases 41.87 per cent when impacts of SEIS and EIS tax reliefs are taken into account.
Investors with portfolios of 20 or more investments have outperformed the market on average, with average IRRs of 15.01 per cent, or 43.39 per cent when tax-adjusted.
Roughly 40 per cent of Seedrs’ deals have been for digital businesses and 20 per cent for non-digital. The remaining 40 per cent have been hybrid digital/non-digital models.
Nearly 60 per cent of its deals have been for B2C businesses, with 30 per cent for B2B ones and the remaining 10 per cent for businesses with both B2C and B2B models.
Of Seedrs’ 15 sectors, the three most popular in terms of number of funded deals have been food and beverage (11 per cent of deals), finance and payments (11 per cent) and travel, leisure and sport (10 per cent).
Businesses with hybrid digital/non-digital elements to their models have performed better than pure digital and pure non-digital businesses on average, achieving a non-tax-adjusted IRR of 16.88 per cent.
Businesses with both B2B and B2C models have outperformed pure B2B and B2C businesses on average, with an 18.27 per cent non-tax-adjusted IRR.
The three best performing sectors to date have been food and beverage, with a 22.77 per cent non-tax-adjusted IRR; home and personal, with a 17.79 per cent non-tax-adjusted IRR; and finance and payments, with a 16.91 per cent non-tax-adjusted IRR.
Seedrs was able to obtain much of the information required to make these fair value determinations through the information rights it holds in its capacity as nominee for each investment.
Jeff Lynn (pictured), CEO and co-founder of Seedrs, says: “The release of this portfolio update is momentous for Seedrs. I co-founded the business in 2009 because I am a strong believer that a portfolio of early-stage investments can produce great returns for investors large and small. Now, for the first time, we have the data to prove it. The Seedrs portfolio has achieved an IRR in excess of nearly every other asset class, and that’s even without taking into account the impact of tax reliefs. As importantly, our active investors have shown that, on average, they can beat the market, using Seedrs to build portfolios of outperformers. It is difficult to overstate the importance of this data: it is a game-changer for us and for the many investors from all over Europe (and, soon, the US) who allocate capital through our platform.”
Seedrs investor Robin Vaudrey, head of CEE region at the European Investment Fund (EIF) in Luxembourg, says: “My work at the EIF, the largest investor into European venture capital, has brought me close to the cutting edge of European technology and innovation, but until I came across Seedrs the opportunity to personally invest in such exciting new ventures did not exist given the traditional barriers to investing in private companies. I find the investment propositions attractive even without any additional tax incentives, as I am resident on the Continent and not a UK taxpayer. I find the level of professionalism of most other investors, the fundraising entrepreneurs, and the Seedrs platform itself, to be very high. I’m particularly pleased Seedrs uses private equity industry best practice for valuations.”
Seedrs has now funded more than 380 deals since launch in July 2012, with more than GBP150 million invested on the platform to date.
