Tuesday, 27 March 2018

So what's the deal with Seedrs shareholders in recently sold Freeagent?

Freeagent just sold to RBS for £53m. Back in 2015 Freeagent used Seedrs to raise £1.2m.

In what was at the time the first crowdfunded company to IPO, Freeagent went public in 2016, just a year after crowdfunding. The launch price for shares was 84p valuing the company at several million pounds less than Seedrs attempts. Figures are hard to verify at this stage but this IPO was a down round for Seedrs investors. The price since then has been as high as £1.42 but recently was on a gradual decline into the sub 70p bracket. Seedrs investors initially paid £10 for shares but this was reduced to £1 in a 10:1 split in 2016.

The CH filings for Freeagent are a disaster -  couldnt make a lot of sense of them. The long and short of it appears to be better to wait for an IPO with guaranteed liquidity than invest on Seedrs. The other very obvious conclusion is that this company was overvalued by a very large amount if you take the industry norm of a 10X ROI. On this basis shares should have sold to investors on Seedrs at around £5m not over £30m. I wonder why? 


  1. If the deal goes through before September shareholders in the Seedrs round will need to hand back their 30 per cent tax relief, and there will be no CGT benefits if they've used their annual allowance. Ok there'll still be a profit, but you could have made more money in less risky ways.

    1. According to Seedrs the date is May 2015 not September.

    2. The share issue date is what's important, and my EIS certificate relating to the investment says-

      Share issue date: 27 August 2015
      Termination date: 27 August 2018

    3. Thanks - that we thought but Seedrs were very clear about May. Someone is not telling the truth!!

    4. If you can be bothered could you email me rob@ecfsolutions.co.uk a copy of the EIS cert. Tks.

  2. What ROI will Seedrs investors get on this?

  3. Is Seedrs addressing this anywhere? It surely is a huge slap in the face for (or even from) them.

    Free Agent's decision not to transact ~2 months later cuts a ~68% return with EIS down to an appropriately unlucky 13% return (*). All for apparently little to no reason; no communication suggests a transaction 2 months later would cause issue to Free Agent.

    How many EIS investors feel suitably aware that one of their risks is the company they are investing may callously choose to exit a few days before the 3 year deadline and you will then just loose a lot of your potential profit.

    *: something like this:
    With EIS: £100 of shares sell for £120, you will have actually spent £71.5 after claiming 30% EIS and paying £1.5 for the Seedrs 7.5% carry on profit, no cgt so that's 71.5 -> 120: 120/71.6 = 168%.
    Without EIS: £100 of shares sell for £120, you will have actually spent ~£106.6 after paying £1.5 for the Seedrs 7.5% carry on profit and then 18% CGT on the profit you actually see. 120/106.6 = ~13%

  4. Also wondering what if any recourse there is on this! Do we forego EIS or not?