This document discusses how online investment platforms like Seedrs are harnessing crowdsourced capital for startups by allowing ordinary investors to invest small amounts. It notes that traditionally only the wealthy could invest in startups, which limited funding opportunities for entrepreneurs. However, online platforms now give mass affluent individuals access to startup investing by enabling them to build diversified portfolios more easily and cheaply. This expands the pool of capital available to startups while offering mainstream investors an appealing asset class.

1. Harnessing the Capital of the Crowds
How Small Investment Can Lead to Big Business
Jeff Lynn
CEO and Co-Founder, Seedrs
4 October 2012

2. The Problem with Crowdfunding
• It covers lots of different economic activities:
Politics Consumerism
Emotion Profit

3. The Investment Side
• It’s a subset of crowdfunding, but that doesn’t
mean much
• More importantly, it’s part of two critical
evolutions
• Evolution of finance – from the rich to the masses
• Evolution of the Internet – from e-commerce to
electronic finance

4. Startup Investing and the Masses
• In the absence of online platforms, investing in
startups is limited to the rich (top 1%)
• The top 20% have investable capital
• The majority of investable capital held by individuals
is held by people in the 2%-20% (mass affluent)
• The mass affluent aren’t mega-rich, but they tend to
be sensible, grown-up adults who can, and would
like to, invest their money as they choose

5. Startup Investing and the Masses
• We see startups as an appealing asset class
for the mass affluent
• Strong returns
• 22% IRR
• Average 2.2x over 3.6 years
• Risky but not complex – two very different things
• Particularly appealing in light of the alternatives

6. Startup Investing and the Masses
• Platforms like Seedrs give the mass affluent a
chance to invest in startups
• This in turn opens a new pool of capital to
entrepreneurs

7. Startup Investing and the Internet
• In the absence of on-line platforms, it is hard
for anyone to build a portfolio of startup
investments
• It takes lots of time (>20 hour per deal)
• It takes lots of money (>£10,000 per deal)

8. Startup Investing and the Internet
• For startup investing to be sustainably
profitable, you need to have a very wide
portfolio
• Data shows the returns are strong, but they’re
skewed
• 81% of returns came from 9% of startups
• 56% of investments failed
• A well-constructed portfolio includes 50
investments or more

9. Startup Investing and the Internet
• Platforms like Seedrs give investors a way to
build a portfolio of startups instead of
• This in turn allows a wider range of startups to
get funded

10. Conclusions
• Crowdfunding is great – but it’s a broad term
that doesn’t mean very much
• Investing in startups online, though, is an
important development
• New investors
• New way to build a portfolio

11. Questions?
@seedrs
@jeffseedrs
Seedrs Limited support@seedrs.com
2 Chapel Place t +44 (0)20 8638 0650
Rivington Street
London EC2A 3DQ
United Kingdom www.seedrs.com
Seedrs Limited is authorised and regulated by the Financial Services Authority.