Private equity investment platform Seedrs has reported a platform-wide annualised rate of return (IRR) of 12.02 per cent and top quartile investor IRR of 31.34 per cent in its latest Portfolio Update, which provides an in-depth analysis of the characteristics and performance of the deals funded on the platform.
The Autumn 2018 edition of Seedrs’ Portfolio Update looks at the characteristics and performance of the 577 deals funded on the platform up to the end of 2017, up 202 deals from the previous report. The dataset continues to show that Seedrs investments, on a fair value basis, have seen outstanding performance on average when compared with other asset classes.
When announcing the previous Portfolio Update in 2016, the only report of its kind in the sector, returns were solely on paper. However, following the launch of Seedrs’ secondary market in June 2017, investors now have the opportunity to realise some of these returns (subject to eligibility and demand).
Across Seedrs’ 17 sectors, no one sector accounts for more than 12 per cent of the portfolio, with the three largest being Food and Beverage (11.44 per cent of deals), Finance and Payments (11.27 per cent of deals) and Home and Personal (11.09 per cent of deals)
B2C businesses make up nearly half of Seedrs’ portfolio, with B2B accounting for 30 per cent and mixed B2B/B2C making up the rest.
Three quarters of deals funded have been through straight equity campaigns with a further 20 per cent through fund campaigns, and the remaining handful of deals as convertibles.
A hypothetical portfolio that includes all 577 of deals produces a platform-wide IRR of 12.02 per cent (26.42 per cent when EIS and SEIS tax reliefs are taken into account).
The sectors delivering the strongest annualised rate of return on a non-tax adjusted basis were Finance and Payments (21.96 per cent IRR), Home and Personal (21.78 per cent IRR) and Programming and Security (18.82 per cent IRR).
The top decile (10 per cent) of investors who have made 10-plus investments have achieved outstanding average IRRs of 47.90 per cent (62.45 per cent when tax-adjusted).
The top quartile (25 per cent) of these investors have average IRRs of 31.34 per cent (46.74 per cent when tax-adjusted).
Jeff Lynn, co-founder and Executive Chairman at Seedrs, says: “One of our overarching goals when founding Seedrs was to bring the sort of data and transparency to the market for private equity that exists in other asset classes. Our groundbreaking series of Portfolio Updates is one example of our attempts to let investors and others quantify what is happening in our market. There is a lot more we plan to do in sharing our data going forward, but I am pleased that with this new edition of our Portfolio Update, we are continuing to push forward with our quest to rationalise this part of the capital markets.”
Jeff Kelisky, CEO at Seedrs, adds: “Our latest report is a reflection of the positive returns investors have access to in early-stage private equity. A 12.02 per cent platform-wide IRR is very strong, outperforming most other asset classes even before tax reliefs are taken into account. What’s really exciting about this report is the performance of our top quartile of investors. One of our aims has always been to create a marketplace that enables investors to choose the businesses they want to back and earn returns based on how well they have selected – just as venture capital investors do. The performance of our investors shows that we are doing just that.”
Andrew Rubio, investor on Seedrs and Chief Executive at a Financial Services firm, says: “Investing in startups is something that has always interested me, as high-risk can equal high-return if you diversify properly. However, until Seedrs, the opportunity to invest personally in early-stage and growth ventures didn’t exist. I’m pleased to see Seedrs take investor protections seriously, offering a wide range of investment opportunities and continuing to innovate with products like their Secondary Market. The launch of this latest portfolio update is yet another example of how Seedrs is leading the way in early-stage investment, bringing a level of transparency and visibility that is so important before making investment decisions.”