I first interviewed Jeff Lynn in early 2013, when his equity crowdfunding platform Seedrs was in the very early stages of growth but his optimism immutable. When our paths crossed again last week, I was eager to catch up with the charismatic founder of a £30m business that has recently entered into a strategic partnership with tennis pro Andy Murray.
Given the constant publicity surrounding Silicon Valley, it might seem incongruous that a US-born entrepreneur, who previously spent four years working for the law firm Sullivan & Cromwell in New York, would then decide to set up a business here in Britain. But Lynn, who was once named one of the 100 most influential men in Britain by GQ, believed Shoreditch offered far greater opportunity for an equity crowdfunding platform than its sunny Californian counterpart.
He says: "People assume that crowdfunding was something that came out of America - and rewards crowdfunding [websites like Kickstarter] did. But Britain is about five years ahead of the US when it comes to equity crowdfunding." It took until October this year, for instance, for the US SEC (Securities Exchange Commission) to ease alternative finance legislation and allow all Americans to invest in the equity of startup companies raised through online crowdfunding. Not that it was easy here: Lynn and his business partner Carlos Silva started working on Seedrs in 2009 and the platform wasn't launched until July 2012. "We were the first regulated equity crowdfunding platform in the world," he says. "And being the first regulated business in any industry is not something I would recommend."
Seedrs has now funded close to 300 deals. It is, of course, a high-risk asset class - the startups which approach Seedrs are almost always those that wouldn't get a bank loan. But it's increasingly popular: the amount invested every month on the platform (currently somewhere between £3m and £6m) continues to rise. Notable rounds include the £3.95m raised by publicly-listed Chapel Downs last year from over 1,400 people - becoming the largest equity crowdfunding campaign ever - and Tossed, which raised £1.26m over the summer, the largest food brand to raise equity crowdfunding.
But let us rewind to 2009, when the ambitious entrepreneur made it his mission to build a platform to make it simple and straightforward for people to invest in "businesses they believe in". He says: "At the time, there was plenty of access into public markets, but the private market of investing in growth businesses was stuck in the Victorian era: groups of rich people were getting together and writing cheques". There was, Lynn felt, huge opportunity to democratise the asset class, while giving entrepreneurs a new source of capital so that they would no longer be dependent on the limited friends, family or angel money.
Lawyers feared Seedrs would "never get regulatory approval," and Lynn faced criticism from those who viewed equity crowdfunding as niche: "They believed there were only a handful of startups out there at any given time, and that we'd only wind up funding a proportion of them. Perhaps, they said, we'd fund 10 companies a year - but that's not a business, it's a hobbie."
Yet Lynn saw the concept of people putting their personal money behind businesses that interest them as the future of finance. Perhaps such vision is necessary if you've made it your mission to shake up the finance industry. Disruption, after all, is all about risk-taking, trusting intuition and rejecting the status quo.
"It's been an interesting and entirely encouraging experience for me these past six years," Lynn muses. "I walked into a world that was dichotomised between investible/non-investible, growth/lifestyle, tech/non-tech into a world that's more fluid, and where businesses in a wide range of industries can take advantage of technology and experience the kind of growth that used to be the preserve of only a limited sector."
Crowdfunding can certainly help entrepreneurs raise funds when they need it most. Let's hope it continues its rise from a niche to the main financer of small businesses. With over 500,000 new companies being started in Britain every year, our entrepreneurs need all the support they can get.Suggest a correction