For London to earn the coveted label of “Fintech capital of the world”, there need to be a couple of unicorns, the companies that trip off the tongue when talking about London and Fintech.
In Silicon Valley lingo (the Esperanto of high trajectory startups), a “unicorn” is a multi-$ billion startup. Like unicorns and perfect powder snow days, multi-$ billion startups are rare.
Unicorns are global. If you start in a massive market such as America or China, you can get to scale locally before you go global. If you start in a relatively small economy like the UK (#7 in global GDP ranking), you need to conquer America (or China) when you are still a “baby unicorn”.
Hanson Trust, which invented what became the Private Equity roll-up model (which was copied by Misys in enterprise software), used a tag line “A Company from over here that is doing rather well over there” with an image of the British and American flags intertwined.
I lived in America for many years. It is a big market and a tough market. The Frank Sinatra line says it all – “ If I can make it there, I’ll make it anywhere”
Seedrs caught my eye when I watched the London Techcrunch Disrupt Panel on Fintech. Jeff Lynn “came across well” as a mature leader who knew what it takes to execute on the world stage. He was clearly eyeing the US market. Of course he knew then that he was closing the deal to buy Junction Investments in America. The announcement reads a bit like an acquire-hire, which is a smart way to get access with limited capital. An acquire-hire does not require a lot of cash, but you do need to persuade some smart entrepreneurs, who know your market, that you are the right horse to bet on.
The other UK Crowdfunding venture that many reference is Crowdcube. They are clearly doing well and recently closed a Series A. CrowdfundInsider has a good comparison of Seedrs vs Crowdcube. TL:DR, it is a tortoise and hare story; Crowdcube is the leader today, Seedrs is executing more carefully.
So, it looks like there are two serious contenders for a global Crowdfunding winner that originates from the UK. For the reality is that it is a global race where you have to face both Angel List and Kickstarter.
There are two end games:
Either Angel List or Kickstarter buys Seedrs or Crowdcube to accelerate expansion into Europe.
Or Seedrs or Crowdcube succeeds in America and becomes a global winner.
Network based markets tend to a winner takes all model. The best investors and entrepreneurs congregate on the best platform and that means that….
Taking off my “proud to be British” hat, Crowdfunding today looks like a global race between Angel List and Kickstarter. They are coming from different directions:
- Angel List is coming from the high trajectory Silicon Valley world with an equity model.
- Kickstarter is funding everything else from creative works to electronic products via a “perks and product” funding model.
There is room for multiple models in crowdfunding. However, “world’s collide” because “bits don’t stop at category borders” as seen by the Oculus team that got $2.4m of funding without giving up any equity.
Regulation is key and in America that means the JOBS Act. This will set the global standard. Some countries may be ahead of this standard, creating looser rules to encourage domestic startups. Other countries may be behind this standard, creating tighter rules to protect the general public (and more cynically, to protect incumbent financial services firms). However, whether a country is temporarily ahead of or behind the standard does not change the fact that the JOBS Act sets the standard.
Seedrs has a shot at the big time, but faces stiff competition from Angel List. Many great entrepreneurs have had their hopes dashed when breaking into the American market. Tomorrow I will be reviewing “the one to beat” – Angel List.