Investors can take punt on start-ups with crowd-funding, conference told

Investors can take a punt in high-risk, high-reward start-up companies through ‘crowd-funding’, a well-attended conference heard in Croke Park.

Thomas Davies, the owner of London-based FSA-regulated Seedrs, outlined the innovative new concept, which is becoming much more popular in the UK market.

Crowd-funding aims to match small investors looking to invest in start-ups with high-potential companies looking for seed capital.

The premise behind the model is that up to up to 1,000 investors can invest in the same company for as little as £100 (€115) each up to a maximum total investment of £160,000.

Because there is a very high failure rate among start up companies, crowd-funding enables investors to take a punt on a number of companies by spreading the risk. Moreover, through the UK Seed Enterprise Investment Scheme, there are massive tax advantages to investing in start ups.

As it stands, Seedrs is only open to companies based in the UK but Mr Davies said Seedrs plans to expand into Europe.

This was just one of the initiatives presented to a room full of entrepreneurs and venture capitalists organised by InterTrade Ireland.

Since the Irish financial sector imploded in 2008, domestic companies have experienced huge difficulties accessing credit. Moreover, because there has been a huge amount of wealth destruction across the high net worth sector, which has choked funds that could have gone into angel investor funds.

The audience heard from a number of entrepreneurs about their experiences of raising capital in this country. Among the speakers included Paul Adams from Facebook and Johnny Walker from Global Diagnostics.

“In the current economic climate, it is more important than ever that knowledge and resources are shared across the island for the mutual benefit of both economies and our conference is key to achieving this in the venture capital space. Our objective is to assist equity raising businesses to become first class investor ready companies,” said Martin Cronin, chairman of InterTrade Ireland.

Drew O’Sullivan, lead equity adviser with InterTrade Ireland said, “At the early stage, there is a substantial amount of seed equity funding. In Ireland, we are seeing approximately 40-50 deals a year, each from €500,000 to €1m, which is almost triple the level three years ago.”