Seedrs, the equity crowdfunding platform, is to be acquired by an American peer for about $100 million.
Republic, a US start-up investing service, has swooped on the British company just months after the competition watchdog torpedoed its planned merger with Crowdcube.
In March, the pair abandoned their proposed tie-up after the Competition and Markets Authority said “blocking the merger may be the only way of addressing competition concerns”.
The platforms, which allow ordinary investors to buy stakes in fledgling companies, warned that without a deal “one or both firms [could] exit the market or would need to re-orientate their business strategy”.
The CMA concluded that a “deal between the two could result in UK SMEs and investors losing out as a result of higher fees and less innovation”.
Now Seedrs is to be swallowed by the five-year old Republic, which will use the London-based company as a bridgehead into Europe.
Seedrs was founded in 2012 by Jeff Lynn, 43, and Carlos Silva, 42, who met on an MBA course at Oxford Saïd Business School. Silva’s landlord put in £30,000 and introduced them to other angel investors. It was the first regulated equity crowdfunding business in the world and to date it has helped startups raise £1.5 billion from investors. Andy Murray, the tennis player, has invested in several companies through Seedrs, but it is best known for helping digital bank Revolut to raise seed capital.
Lynn will stay as executive chairman and oversee Republic’s expansion into Europe. The British company had applied for a licence in Ireland so that it can offer services across the EU. Brussels has harmonised rules for crowdfunding platforms, allowing them to do business in the single market.
About 5,000 small investors are said to own stakes. Investors in funds formerly managed by Neil Woodford own about 30 per cent. These stakes are being acquired by the US investment firm Davidson Kempner, which will become an investor in the merged group.
Republic said it was ready to “commit substantial capital to drive growth in the UK and Europe”. It aims to develop “the strengths of both companies . . . to create a clear industry leader”.