Crowdfunding platform Seedrs has announced ‘convertible’ equity, with UK-based Future Ad Labs being one of the first to sign up.
‘Convertibles’ are just starting to make their presence felt in Europe having been a mainstay in Silicon Valley for some time. They allow investors to convert their business assets into shares on a future valuation, thereby enabling them to get more for their money should the business exceed initial expectations.
Seedrs says the concept benefits startups as they are not required to value their company at the first instance. In the eyes of Seedrs co-founder Jeff Lynn, ‘convertibles’ level the playing field.
“Offering the first ever crowd convertible is very significant news, not just for Seedrs but for the equity crowdfunding industry as a whole,” Lynn said.
“Unlike some other recent crowdfunding products which appear to limit the potential upside for investors while still exposing them to all of the risks, convertibles allow investors a chance to actually increase their returns.”
Future Ad Labs is the first to jump onto Seedrs’ new initiative. The company has hopes of raising £400,000 from a convertible round for its revenue-making alternative to the needlessly antagonising CAPTCHA.
Howard Kingston, co-founder of Future Ad Labs, hinted that this might be the company’s last chunk of investment before it goes after a more significant round of Series A funding.
“Coupled with the Seedrs’ nominee structure which has been integral to our ability to raise top tier VC funding from Passion, Balderton, and Ballpark Ventures, we believe this convertible will provide us with the perfect launchpad before we go to market for a large round.”
The money that Future Ad Labs raises from Seedrs’ convertibles will be used to launch new products, continue product development and close existing business before the next stage of funding takes place.