Seedrs Announces First-ever Portfolio Results with Overall 14.44% IRR (Annualized Rate of Return)

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Mondovisione | Seedrs News | Aug 7, 2016

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  • Seedrs has today published its first Portfolio Update, looking at the characteristics and performance of the 253 deals funded on Seedrs platform between its launch in July 2012 and the end of 2015.
  • Landmark analysis shows for the first time that, on a fair value basis, equity crowdfunding through Seedrs has produced better annualised rates of return (IRRs) than most other asset classes.
  • Platform-wide IRR increases from 14.44% to 41.87% 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% (43.39% when tax-adjusted).
  • Valuation process confirmed by Ernst & Young LLP (EY) as conforming to the industry-standard International Private Equity Valuation (IPEV) Guidelines.

Seedrs, Europe’s No. 1 equity crowdfunding platform, has today published an in-depth, ground-breaking analysis of the deals funded on its platform.

See: 

Its Portfolio Update looks at the characteristics and performance of the 253 deals funded on the Seedrs platform between its launch in July 2012 and the end of 2015. In addition to revealing useful information about the types of deals funded through Seedrs, the Portfolio Update shows that Seedrs investments have, on a fair value basis, outperformed most other asset classes.

Highlights include the following:

Deal Characteristics

  • Roughly 40% of Seedrs’s deals have been for digital businesses, and 20% for non-digital. The remaining 40% have been hybrid digital/non-digital models.
  • Nearly 60% of its deals have been for B2C businesses, with 30% for B2B ones and the remaining 10% for businesses with both B2C and B2B models.
  • Of Seedrs’s 15 sectors, the three most popular in terms of number of funded deals have been Food & Beverage (11% of deals), Finance & Payments (11%) and Travel, Leisure & Sport (10%).

Investment Performance

  • The platform-wide internal rate of return (IRR), which means the annualised performance of all 253 deals in terms of share price appreciation (net of fees), as of 31 July 2016 was 14.44% on a non-tax-adjusted basis. When the impacts of tax reliefs and liabilities are taken into account, this goes up to 41.87%.
  • Investors who have built portfolios of 20 or more investments have, on average, outperformed the overall market. They have achieved an average 15.01% nontax- adjusted IRR (tax-adjusted: 43.39%).
  • 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% (tax-adjusted: 42.78%).
  • Businesses with both B2B and B2C models have outperformed pure B2B and B2C businesses on average, with an 18.27% non-tax-adjusted IRR (tax-adjusted: 41.74%).
  • The three best performing sectors to date have been Food & Beverage, with a 22.77% non-tax-adjusted IRR (tax-adjusted: 49.73%); Home & Personal, with a 17.79% non-tax-adjusted IRR (tax-adjusted: 57.76%); and Finance & Payments, with a 16.91% non-tax-adjusted IRR (tax-adjusted: 43.20%).

Ernst & Young LLP (EY) reviewed the procedures and processes used by Seedrs for determining the estimates of fair value used to calculate the investment performance numbers, and EY considers that they are in line with the industry guidance set forth in the International Private Equity Valuation (IPEV) Guidelines.

It is worth observing that Seedrs was able to obtain much of the information required to make these fair value determinations, in a robust and verifiable way, by exercising the information rights it holds in its capacity as nominee for each investment. One of the benefits to investors in Seedrs acting as nominee—and entering into subscription and/or shareholders agreements with each investee company—is that the platform has reliable access to ongoing information about the performance of the investments. Platforms and networks that do not have the comprehensive information rights granted in these agreements do not have access to the same level of information.

Jeff Lynn, CEO and Co-founder of Seedrs comments: “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 United States) who allocate capital through our platform.”

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1300+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

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