SyndicateRoom has come a long way from its roots in helping early start-ups raise seed capital for their enterprises.
The firm's sole proposition at launch in 2011 was an investor-led equity crowdfunding platform that let users co-invest alongside experienced investors in highly sophisticated opportunities.
Its business model was further augmented once it secured intermediary status with the London Stock Exchange in March this year – thus elevating itself above rivals by becoming the first crowdfunding platform to join the public markets.
The deal with the LSE provided a pathway for ordinary people to participate in fundraising exercises carried out by the biggest firms in the country that are typically reserved for large funds.
The Financial Conduct Authority regulated Cambridge-based company eyed participation in the initial offering of shares in the part privatisation of Lloyds Bank, but the government has since abandoned plans to launch a major retail share offer.
Use of the platform commands a relatively steep minimum investment. The figure is £1,000 – preventing anyone making an investment decision on a whim.
At the time of writing, the platform has raised more than £57m. In addition, the company’s portfolio for 2014-15 was valued at 135 per cent of the original investment.
The firm diversified its proposition further with the launch of its maiden fund, called Fund Twenty8, which invests in Enterprise Investment Scheme opportunities.
While most EIS funds have between five to 10 investments focussing on a single sector, Fund Twenty8 will hold at least 28 companies within the portfolio across a broad range of sectors, according to James Sore, SyndicateRoom chief investment officer.
However, the portfolio is currently biased to technology, healthcare and life science sectors, which make up about two-thirds of the fund, he said.
The fund is designed to bring the traditional fund management strategies into the crowdfunding industry, but the management of the product differs from typical investment funds.
Rather than relying on a single fund manager, SyndicateRoom works with a team of business angels, venture capitalists and other lead investors from the angel funding stage – that is, prior to the crowdfunding process.
The firm vets the lead investor of the angel stage to ensure they have the credentials to fully manage the investment – including demanding changes in governance if and when applicable.
Mr Sore, said: “We realised that if we wanted to have a fund that invests across multiple sectors, we would need a team of people who specialise in that sector. Hiring our own team would not be economical.
“If there is a very big disconnect between the lead investor and the company, we would flag it and ask questions like ‘why did the individual invest in the company in the first place?’ Just because you have invested a lot of money in a company, it does not mean that you are the best person to manage it.”
