Envestry for Startups is a new whitelabel SaaS for SMEs and start ups to raise funding via equity crowdfunding using their own bespoke site - well one borrowed at a cost from Envestors, the new platform's parent company.
We emailed Scott Haughton, Envestry's CEO, a series of questions and he kindly replied - the text is below.
Does this help ECF? We dont really think so. It wasnt an issue in our eyes in the first place. The issue is the lack of information symmetry between the companies pitching and the investors investing. Envestry still use self assessment as the mainstay of their vetting process - which, as you know, we think is a very poor idea. The fact that an FCA regulated member of Envestry sanctions the pitches means not a lot - as numerous scandals on FCA regulated platforms have shown. In the end Envestry have no skin in the game. See what do you think......................
1
How does this ‘new’ idea help to improve the
quality of the businesses that currently use equity crowdfunding?
Envestry for
Scale ups helps early stage and high-growth businesses to raise funds from seed
stage through to maturity or exit. Our aim with the product is to empower these
businesses by giving them total control over their fundraise.
Controlling the
quality of businesses fundraising is not the purpose of the software product,
however the due diligence that we conduct on each business as part of our sign-off
for financial promotion creates a high level of transparency which is uncommon
in crowdfunding.
We provide all
companies with a Key Investment Data Document (KIDD), which is a comprehensive
template that must be completed prior to sign-off for financial promotion. The
document forces companies to be transparent about the accounts, liabilities,
conflicts of interest, corporate governance and deal structure. Making this
information accessible through the platform makes it easier for potential
investors to evaluate the opportunity.
2 What you are offering is essentially already
available via Sharein and other white label supplier companies that offer
SaaS for ECF companies.
Envestry for
Scale ups gives businesses their own dedicated platform that they control.
Other businesses in the market offer a shared platform for fundraising, where
multiple investment opportunities are hosted and/or marketed to a network of
investors. With Envestry for Scale ups, businesses can market to their own
community, drive them towards their own site and retain 100% of investor data.
Envestors is loss making – what message does
that give
It shows that we are committed to
investing in our software product to deliver our vision of giving businesses
control over their fundraise. Our business strategy requires a planned upfront
investment in product development.
Who is liable for the information that your
platform provides to investors and will this be checked? Under the FCA
regulations for equity crowdfunding, information cannot be misleading. How will
this new platform deal with this? Will you make investments in these companies?
Any deals posted on Envestry for Scale
ups require regulatory sign-off to meet with FCA requirements. We offer a
service, through our corporate finance team, to review documentation and
provide the sign-off. Businesses also have the option of using a third-party to
meet regulatory approval. However, sign-off by an FCA regulated professional is
always required before a deal can be posted on the platform.
What will you charge and who will pay?
Our pricing for
Envestry for Scale ups starts at £95 per month. Businesses have the option of
adding-on additional services should they require professional assistance with
their fundraise. Our corporate finance team provides a range of support
covering everything from deal structuring to valuation guidance to shareholder
reporting.
An entry level
package that includes the platform for six months, onboarding, training and
financial promotional regulatory sign-off, is £1450. Service fees of 3% are
applied to funds raised.
We have priced
the software to be affordable to growth businesses, who are typically lean and
want to keep the cost of raising capital to a minimum.
The platform is
suitable for startup and scale up businesses with their own networks who seek
to raise more than £150,000.
Where will companies have access to a crowd
outside of their own
Companies using Envestry for Scale ups,
have the option of applying to ‘share the deal’ with the Envestors’ extended
network which includes over 7,000 sophisticated investors. Deal sharing is at
the discretion of each investment network and is not guaranteed
What marketing budget have you? What
credentials does your team have?
Envestors is not
a marketing company and partner to provide marketing services to our customers.
Is there a min or max raise?
The maximum
amount a business can raise in a single round is €8,000,000. This is in line
with FCA regulation and not set by Envestors. There is no minimum amount for
companies raising finance, however, we recommend a minimum raise of £150,000.
Who will carry out the legals, share issue and
the S/EIS claims?
Envestors has a
number of recommended partners to help businesses with legals, share issues and
S/EIS claims including CMS and Seedlegals. Businesses also have the option of
working with their existing providers.
Will the new platform be involved at all after
a raise is completed and shares are issued?
Envestry for
Scale ups is designed to support businesses throughout their growth stage to
maturity or exit. Businesses typically do four to five funding rounds; the
platform can support them through each round. In addition, Envestry for Scale
ups has a built-in investor relations tool. With this tool it is easy for
businesses to keep all of their shareholders informed of their progress and to
market any additional funding rounds.
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Our thanks to Stuart for taking the time to reply.
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