The crowdfunding platforms announced news of the deal this morning.
Crowdcube and Seedrs have agreed on terms to merge.
The two firms, who say £2bn has been raised across their combined platforms since 2011, are hinting at a bold new strategy to include marketplace access to larger private equity-level deals for investors.
Jeff Kelisky, Seedrs’ CEO, will serve as CEO of the combined company, and Darren Westlake, Crowdcube’s CEO and co-founder, will serve as Executive Chairman.
Kelisky says the firms are well-positioned to "create a powerful global private equity marketplace that will transform the ecosystem of equity finance globally.”
“We are both fintech pioneers that have challenged the landscape of capital raising in Europe, building marketplaces for private equity investment. We believe that you need to be a player of greater scale to serve companies and the investors who support them. Now is the right time to bring our strengths together, in order to meet our common mission to deliver a step change in the accessibility and efficiency within private company investing. This will not only create value for ambitious companies and their investors, but also for the economies and communities that they serve," he said.
The management team will include key leaders from both businesses.
The merger is to be structured as an acquisition by Crowdcube of all of the outstanding share capital of Seedrs. Existing Crowdcube shareholders and option holders will own 60 per cent of the combined company. Existing Seedrs shareholders and option holders will own 40 per cent of the combined company. The merger ratio reflects the approximate valuations of the two companies based on each of their most recent fundraising rounds.
The deal is subject to approval by the UK Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA) and shareholders of the two companies as well as the sanction of the Court. The transaction is expected to be completed in late 2020 / early 2021.
The new firm, who name is yet unclear, "aims to deliver new innovations and products that will make it significantly easier, more affordable and valuable for ambitious businesses to raise growth finance, and investors will have an even greater selection of investment opportunities with richer investment tools," according to a media release.
Darren Westlake, CEO and co-founder of Crowdcube, said "equity crowdfunding has redefined how many ambitious businesses raise investment and engage with their customers. Today’s agreement is an incredibly exciting milestone that will benefit high growth businesses, their investors who believe in their vision and the wider entrepreneurial ecosystem that supports them. Together with Seedrs, we can accelerate plans to further expand in the UK and overseas, launch innovative new products and improve our customers’ experience.”
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