The proposed merger of Seedrs and Crowdcube has been backed by the crowdfunding and fintech industries.
The two equity crowdfunding platforms this week unveiled plans, subject to regulatory approval, to merge. The deal will be structured as an acquisition of Seedrs by Crowdcube, with existing Crowdcube shareholders owning 60 per cent of the new company, and existing Seedrs shareholders owning the remaining 40 per cent.
Both platforms have been a popular route for peer-to-peer lenders to raise finance.
Trade body the UK Crowdfunding Association (UKCFA) said the merger creates a “real powerhouse” of start-up and growth finance.
“A decade ago, Seedrs and Crowdcube pioneered this important sector, starting a revolution in finance which has been taken up around the world,” a spokesperson for the UKCFA said.
“This merger gives the UK a powerful player to maintain that leadership position for the decades to come.”
The deal also looks set to provide a boost for the Augmentum Fintech investment trust.
As of 31 March 2020, Seedrs represented approximately 1.2 per cent of Augmentum Fintech’s company portfolio.
“Since our initial public offering in 2018 we have built a balanced portfolio of diversified and differentiated private fintech companies, who have benefited from the pace of digital disruption which has further accelerated in recent months under the shadow of Covid,” Tim Levene, chief executive of Augmentum Fintech, said.
“Our ambition remains to grow the fund to enable us to continue investing across our portfolio companies, and to exploit our access to some of Europe’s exceptional fintech opportunities in both the UK and the wider European market.”
Analysts at brokerage Numis added that crowdfunding platforms have become a “significant source of capital” and said Augmentum’s portfolio is focused on “areas set to benefit from changes in consumer and business behaviour towards digital financial services accelerated by the pandemic.”