Southbank + Seedrs = the Early Money Edge

As you’ve seen today and yesterday, I’ve been singing the virtues of investing in private companies before they become stock market darlings. Getting in early into tomorrow’s potential superstars of industry before the masses and markets even realise what’s going on.

We call this the Early Money Edge.

When you can get invested into a company with huge, long-term value potential early, you have an edge over the market and the money that comes later.

It’s not rocket science, really. If a company is worth a few million today, you invest in it at that valuation and if it grows over time to a valuation into the billions, or (those unicorns) into the trillions, you are often ahead of those that come in later for investment and those that might get just getting in at an initial public offering (IPO) when you’re getting out.

This is the edge that investing in private unlisted companies can offer.

Now, it should be said that the likelihood of striking it rich from just one company is rare, regardless of if you’re early, on time or late.

It’s very difficult – and even when you’re early, that’s also when most companies fail too. In that outcome, being early is highly risky too.

But we’re all adults here. And as one of my subscribers, I reckon you know a thing or two about managing your capital and managing your risk. I almost exclusively look for these high-risk, high-reward opportunities.

So how you balance your risk tolerance and capital allocations is up to you. Only you know what works for you and what doesn’t. A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

I’m also guessing you’ve probably heard a thing or two about equity crowdfunding before as well. You may even hold some stock in private companies or used some of the crowdfunding platforms to invest in early-stage private companies.

Perhaps you’ve heard about it but haven’t yet taken that step into the light.

Well this is what I want to write about to you today.

As I’ve teased this week, we’ve been working behind the scenes for a few months now on getting new opportunities to you in equity crowdfunding campaigns.

More specifically, we’ve been working with crowdfunding platform Seedrs to filter through and whittle down available opportunities to deliver to you what we currently believe is a great potential opportunity on its platform.

This morning, I suggested that if you were interested in early-stage investing that you should head to the Seedrs site to get familiar with it and if you didn’t have one, to set up an account with Seedrs.

If you missed this morning’s editorial and the info about signing up with Seedrs, head here to check it out. And if you’ve not yet set up a Seedrs account – head there before tomorrow, and make sure to set up your account, it’s necessary for what’s coming tomorrow (more on that shortly).

But first, let me wind back the clock a little for some more context as to how we got here and what it all means for you…

Beta-testing an idea with Seedrs and you

Through the team at Seedrs and the team here at Southbank Research we’ve been going through the processes on ways in which we can collaborate and work together.

If you don’t know Seedrs by now, they’re a crowdfunding platform that opens investment into private companies that are looking to raise money. These companies tend to be early stage, startups that are high-risk, private, and with all the trimming and traps that comes with that.

For more information on Seedrs, you can click here.

Also, to get an idea of how the platform did in 2022, which admittedly was a really tough year for all markets, check out its 2022 Year in Review.

The reason we’ve been working behind the scenes for months with Seedrs is because when you boil it all down, investing in private early-stage and startup companies can be hugely rewarding.

For example, we asked Seedrs for a list of companies that have been open to investment on its platform for investors just like you, that have gone on to successful exits, either through an IPO or acquisition.

Here’s what Seedrs sent back with the multiple return alongside:

Oddbox – 31.9x
Cushon – 5x
Senta – 120x
Orbital Witness – 8.1x
Land Technologies – 75.5x
Swogo – 16.36x

And then just in the last couple of weeks, another company, Zypho, which raised through Seedrs in 2018, was acquired – delivering a 3.8x return to Seedrs investors.

The reason we’ve been working with Seedrs is because we want to get exciting, profit-potential opportunities, just like these, in front of you to invest in with early access.

Now, it’s worth pointing out, not everything is a winner. It’s very high risk. And as I’ve already written about this week, investing in unlisted companies doesn’t always mean you can get an exit or offload your stock with ease. Know that going in.

There can also be some great tax benefits when investing in these small, early-stage companies, where available. In particular when companies offer up equity investment through the UK’s Enterprise Investment Scheme (EIS).

This can get a little complicated, and you should always get appropriate tax advice, but Seedrs has a great 2023 EIS guide that you should read and understand here: Seedrs EIS Guide 2023.

We have a few ideas and opportunities as to what this partnership with Seedrs could shape up like and become in the longer term, but for now, we’re at the point where we’re ready to “beta-test” the idea.

We’re doing this by recommending an upcoming equity crowdfund raise on the Seedrs platform. That recommendation is coming to you tomorrow.

Our relationship with Seedrs is a commercial one, and that’s something we’ll be fully transparent with you about. As Seedrs gets a commission from the campaigns that are listed on its platform, we also will receive a commission from the funds raised that come through us. This is a very normal situation and what you’d expect for organisations that help companies raise capital, but it’s something we want you to be aware of as well.

Having said that, in no way does that impact the crowdfund we recommend – we are only looking for what we consider to be the best of the best on the Seedrs platform. And although we can’t offer any guarantees, we would never recommend anything to you that we wouldn’t invest in ourselves. And it’s likely I’ll be investing alongside you all the way.

Over the last few months in working with Seedrs, we’ve had access to its pipeline of crowdfunds that fit the recommendation window we’ve been looking at (this week) as well as providing us with access to the information we’ve needed to look at and assess the opportunities available.

We’ve gone through a process of:

Looking at what campaigns Seedrs has
Assessing where the opportunity is
Asking, do we believe the company is at a reasonable valuation?
Does the team and the management stack up?
Understand if the market opportunity is big enough
Is the company and its product or offering unique and have explosive enough growth potential for a multiples-exit down the track, through IPO or acquisition?
Are we genuinely excited about the company, the prospects and the potential to deliver profit to you long term?

Through this process, we’ve managed to whittle this all down to one equity crowdfunding campaign that we will be recommending to you tomorrow. That recommendation will look at all that, the risks involved and give you a simple instruction: invest in the XXXXXXXX crowdfund campaign.

In working with Seedrs, and putting this recommendation to you, we are unlocking what we consider to be the most exciting investment opportunites on its platform. That’s the Early Money Edge we’ve been working on.

With a lot of exciting, big crowdfunding campaigns coming through its pipeline, it can be hard to figure out what’s good and what’s not; what to invest in and what to avoid.

We’re doing all that work, which I wrote about this morning, for you. We’re running over things with a fine-tooth comb, and giving you the full deep-dive rundown and recommendation on what we consider the best active campaign on Seedrs right now.

With this opportunity coming tomorrow, and our working relationship with Seedrs, once you decide you want to participate in the crowdfund, you simply head to the link in the recommendation provided and you’ll get Early Money Edge access.

That will take you through to Seedrs who will then manage the process of investing and everything else needed from there. That’s why it’s important that, should you be interested, you already have a Seedrs account set up – you can do that here.

It’s now up to you

Right now, we don’t know how this will go. Hence why it’s a beta test.

We don’t know if you’ll like what we’re recommending tomorrow, we don’t know if you’re going to invest or not – we simply don’t know how well (or poorly) you will receive this and whether it’s something you’re open to more of down the track.

That’s why it’s important for us through this process of putting a crowdfund recommendation to you that we get your feedback. The things you like, the things you don’t like, the process, any frictions or frustrations with it all. We want you to be as much a part of seeing where we can go with this… or not.

For all and any feedback good, bad or otherwise, please let us know at feedback@southbankresearch.com.

To start with, it’s just the one new crowdfund recommendation through the Seedrs platform that you’ll have access to tomorrow. Expect that to hit your inbox tomorrow morning.

Going forward, due to the considerations we wrote about yesterday given to crowdfunding investments, and the beta-test nature of this first expedition, we won’t be actively tracking or providing ongoing updates on the recommendation. You will get those from the company directly and through Seedrs.

In this first instance, we’re overlaying our analysis and insight on Seedrs opportunities and putting the recommendation to you for you to decide and maintain.

In that sense, it looks and feels like our usual stock recommendations, but obviously here in a crowdfund early-stage capacity with an unlisted, private (and very exciting) company that you’ll have the Early Money Edge with.

We’re excited by this relationship with Seedrs, and if there’s positive momentum and feedback from what you’ll get in this beta test, then we’ll consider another, and then who knows where we go to from there.

With that all said, we look forward to delivering your first Early Money Edge recommendation tomorrow, I think you’ll love it and I look forward to your feedback on what’s coming your way.

And just a reminder, this won’t cost you a thing. We’re not selling you anything and you don’t have to subscribe to anything. This is just something we want to offer up to you for being one of my subscribers and to beta test it to see what the reception is like.

Look out for it tomorrow morning,

Sam Volkering
Editor, Southbank Investment Research