First trades on Seedrs secondary market deliver up to 19x returns
Seedrs closed its first secondary market trading window today and announced impressive returns for some of the investors who took part.
Until Seedrs announced the launch of its secondary market, the long-term nature of the early stage equity asset class meant that the vast majority of shares would remain illiquid for some time and investors would need to wait for an exit event such as an IPO or a sale of the business.
The Seedrs secondary market is already changing that. The first trading window opened on Tuesday 6 June and has given investors the opportunity to sell shares in over 80 eligible companies they’ve invested in via Seedrs to other investors who in turn have had the opportunity to increase their stakes.
A few examples of investors who have profited from their exits:
1. One shareholder has made £600 profit having bought shares in a B2B e-commerce business in 2013 for £10 per share. He sold his shares at £95 per share during the first Seedrs trading cycle creating a self directed exit event at a 9.5x return, increasing to 19x as it was SEIS eligible.
2. Another shareholder has made £643 in profit having bought shares in a PaaS startup in 2012 for £10 per share and sold at £74.31 per share realising a 7.5x return, increasing to 15x as it was SEIS eligible.
3. A different shareholder in the same business has made £573 in profit having backed the company in a later funding round buying shares at £16.92 and selling at £74.31 which delivered a 4.3x return, increasing to 8.6x as it was SEIS eligible.
Seedrs’ comprehensive nominee structure means that the platform has taken care of the whole process, without the company whose shares are being traded needing to get involved with any of the administrative matters.
Thomas Davies, Chief Investment Officer at Seedrs, said:
“Before Seedrs launched a secondary market, we had already completed 213 secondary transactions from 129 companies, transferring over 2.5M shares at a value of £728,000 from 148 sellers to buyers. However the secondary market has taken this capability to new levels and the potential opportunities that our monthly trading windows bring for buyers, sellers and entrepreneurs alike makes this development incredibly exciting.
“Secondary markets are challenging to operate successfully, and we are very conscious of our obligation to provide our investors the best experience we can but we are obviously delighted with the success of our first trading window and we will continue to observe behaviour and make improvements as we approach our next window in July.”
As in any market, the ability to buy or sell depends on there being sufficient supply or demand. Seedrs first trading window had over 138 share lots listed of which more than 54 have been purchased as market closes, by investors looking to increase their equity stake in businesses they believe in. There have been more than 275 requests to sell in the next trading window this July.
The secondary market will also evolve over time and Seedrs may look to expand a number of features such as the timing by offering longer windows or continuous trading, the pricing, by facilitating negotiated or bid/offered prices, and eligibility with new investors, when companies are ineligible after the initial beta launch.
Seedrs next trading window will open on Tuesday July 4 and information can be found here: https://www.seedrs.com/secondary-market.