Convertible equity comes to crowdfunding

Lynsey Barber
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Crowdfunding now offers convertible equity (Source Getty)

Seedrs, the British equity crowdfunding platform, will begin offering convertible equity to investors becoming the first crowdfunding platform to do so.

Advertising technology company Future Ad Labs, which previously gained investment using Seedrs, will be the first to offer new investors the convertible investment.

The adtech company is seeking to raise £400,000 through the round of funding.

Convertible equity offers the company the ability to raise a larger round of funding without being tied to a valuation.

Investors in Future Ad Labs will have their equity converted to shares in the next round of funding but receive a 15 per cent discount on the price of the shares based on the value of the company in that round.

Seedrs cofounder and CEO Jeff Lynn explains: “Convertibles offer a real alternative for startups between funding rounds because they are fast, easy and don’t require the parties involved to agree a formal company valuation. This technique has been used in Silicon Valley for a long time, and for fast-growing startups, it offers a great way to continue to raise money before a significant investment round.”

Future Ad Labs has previously raised $1m investment from venture capital firms Angels, Passion Capital, Balderton Capital and Ballpark Ventures, and co-founder and CEO Howard Kingston said the new round will provide a launchpad before going to market for a large round.