In simple terms, these products, like ours at Seedrs, cleverly aggregate smaller investors under a single nominee. This enables LP Funds to raise a portion of their fund from individual investors, giving these investors unprecedented access to this asset class from £100 in the process. As a result, by broadening access to these highly selective funds and enabling eligible investors to participate without meeting the sizable minimum investment thresholds typically required, these products are reshaping the long established industry dynamic.

This modular enhancement to the venture capital ecosystem is a cog that has been turning for some time and represents great news for everyone in the value chain from entrepreneurs and fund managers to investors as well. And here’s why -

For eligible investors, like those reading the Investors Chronicle:

• It allows them to tap into the industry leading expertise that VCs provide and, in doing so, diversify their portfolios with one investment across the range of companies the fund buys into.
• VCs have unrivaled access to the most promising private companies across a range of different sectors. This gives eligible investors exposure to private deals that are typically unavailable to individual investors.
• Finally, it couldn’t be simpler. Investors are able to execute their investment through a smooth online checkout process, which can be completed in a few clicks and can be funded online with debit card or open banking.

Crucially, though, it also helps VC Funds themselves because:

• Platforms can aggregate investors that can't afford the typical LP ticket of £100k. This means that they can bring in people from their networks and follow through on commitments they make of lifelong community support for the entrepreneurs they fund. Many VCs are able to bring founders that they’ve previously backed on board as investors - all made possible by the much smaller ticket price.
• Many VCs also value the ability to diversify their LP base. A wider investor pool can be a powerful tool in supporting the funds’ portfolio of startups and entrepreneurs.
• In a world where it’s becoming harder for VCs to raise funds, managers who wish to raise additional capital in addition to that which they source from their own network, can do so from established communities of high net worth and sophisticated investors.

In 2021, Seedrs announced that Passion Capital, a leading UK early-stage technology venture capital firm, was opening up its latest £35 million fund, Passion Capital Fund III, to eligible investors on our platform. This represented a rare opportunity for investors to participate in a firm that had previously invested in some of the UK’s most exciting early stage tech startups like Monzo. And while that was our first public offering, we’ve actually been doing this privately for some time. Since 2018 we’ve worked with several pre-eminent managers such as Seedcamp and JamJar, boldly reshaping this legacy sector.

Given the present difficulties for VC funding, we’re now only starting to fully appreciate the importance of democratising the industry, pioneering an innovative way of allowing money to flow into the startup ecosystem by building the infrastructure that allows VCs to diversify their investor pool and raise from eligible individual investors.

For years, VC has been an exclusive option reserved for big institutions and super wealthy angels. But we believe that with clear benefits to all parties, throwing the doors open to a wider range of diligent, eligible investors is the right path for the VC industry to continue down. To learn more about Seedrs and our VC Fund Product, please click here.

Kirsty Grant, Managing Director & Chief Investment Officer