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Feb 03 2021

Crowdcube and Seedrs Explain Competitive Reality to CMA in Quest to Complete Merger

Crowdcube and Seedrs are in the midst of a review by the Competition and Markets Authority (CMA) regarding the proposed merger between the two early-stage funding platforms. The proposed merger was revealed in October of 2020. At that time, Seedrs CEO Jeff Kelinsky stated:

“We are both Fintech pioneers that have challenged the landscape of capital raising in Europe, building marketplaces for private equity investment. We believe that you need to be a player of greater scale to serve companies and the investors who support them. Now is the right time to bring our strengths together, in order to meet our common mission to deliver a step change in the accessibility and efficiency within private company investing.  This will not only create value for ambitious companies and their investors, but also for the economies and communities that they serve.  As we look to the future, we’ll be well positioned to build on our combined strengths and create a powerful global private equity marketplace that will transform the ecosystem of equity finance globally.”

Darren Westlake, Crowdcube founder and CEO, added:

“Together with Seedrs, we can accelerate plans to further expand in the UK and overseas, launch innovative new products and improve our customers’ experience.”

Last week, the two securities crowdfunding firms responded to the CMA’s issue statement defending their intent to merge the two platforms warning the regulators that a decision to not allow the firms to combine could create a rather dire outcome.

While the CMA has initially viewed the merger of the two Fintechs as creating a dominant platform in an already small market, the truth may be much different as Seedrs and Crowdcube obviously compete with all private company funding options seeking to entice issuers and investors.

Seedrs and Crowdcube were created as forward-thinking Fintechs leveraging technology to match investors with private firms in a sector traditionally dominated by big money. Incumbents, such as venture capital firms, angel investors, funds, and other online capital formation sites, directly compete in the marketplace to fund early-stage firms. Seedrs and Crowdcube continue to lose money similar to platforms in other markets like the United States. By merging the two, the founders and management hope that a combined firm can more effectively compete in the UK as well as potentially in other markets such as continental Europe and perhaps elsewhere like Asia or the US.

The documents submitted by Seedrs and Crowdcube offer interesting insight into the thoughts of the two platforms that are not only leaders in the UK but are widely watched around the world as the UK was one of the first jurisdictions to legalize investment crowdfunding and thus more mature.

Seedrs believes that if the CMA narrowly defines the industry as investment crowdfunding, at most just one provider will survive and, even then, will struggle to break an event. To quote the document submitted by Seedrs:

“We think it is clear we are competing within all the established players in the SME equity funding (Goliath) rather than operating within CMA’s proposed narrowly defined market of equity crowdfunding ….”

Seedrs states that the merger is the only realistic option to achieve a “sustainable scale.” To achieve a “minimally efficient scale” a platform would need to fund substantially more deals each year that are currently funded by all UK equity crowdfunding platforms combined, claims Seedrs.

“In order to believe that the former of these – that equity crowdfunding is itself a market – one has to believe that equity crowdfunding platforms are competing for an essentially worthless prize.”

Seedrs reports that currently, it competes with around 300 VCs, EIS/VCT firms, and around 20,000 angel investors. They believe this market will grow in size over time but at this moment, Seedrs does not have sufficient scale to turn the corner on profitability.

As well, Seedrs anticipates that a new entrant in the investment crowdfunding sector would cost less than £250,000 and take about 18 months to accomplish and thus the barrier to entry is low – at least to build a platform.

“Broadly speaking, we think there are three types of potential entrants to this segment: foreign equity crowdfunding platforms, investment platforms in adjacent spaces, and established SME equity funding providers.”

Seedrs admits the reality is a bit challenging as:

“… neither Seedrs nor Crowdcube, as the two largest firms in the segment, have yet been able to turn a profit, and we both remaining meaningfully sub-scale. While in early days there was significant optimism in the wider market about the growth potential of equity crowdfunding, our understanding from conversations with a range of other market players is that, in recent years, most knowledgeable observers doubt that there would ever be the potential to make meaningful returns on investment by doing what we do.”

In fact, Seedrs is of the opinion there is no plausible path for the two firms to compete and both emerging as sustainable. In the end, Seedrs predicts that eventually one or the other will run out of money and one may survive or, or worse, none at all. Seedrs describes the state of affairs as being at a crossroads and the merger is the best option to keep things going.

As one may anticipate, Crowdcube is of a similar opinion.

Crowdcube notes that investment crowdfunding is just one segment of the private company funding market and they aggressively compete with VCs and more to list securities in promising early-stage ventures. Crowdcube says the economics do not currently exist to create a sustainable platform minus the proposed merger.

Crowdcube admits that its annual accounts show “significant” losses and does not cover its operating costs. While in lieu of a merger, Crowcube anticipates a “major reorientation of business focus” as well as additional capital. The pivot is not defined.

Crowdfund Insider has long stated that for investment crowdfunding to survive each of the constituent stakeholders must generate sufficient value to thrive. Issuers must be able to raise needed growth capital, investors must be able to generate a positive return on a portfolio basis, and platforms must be able to turn a profit. Foregoing any one of these foundations undermines the sustainability of this sector of Fintech.

As longtime observers of the sector, we are not aware of any early-stage online funding platform turning a profit but we have watched as crowdfunding platforms have iterated and added new services while branching out into adjacent sectors seeking to drive scale. Perhaps a good benchmark is international crowdfunding platform OurCrowd that is a VC hybrid charging a carry while providing access to securities offerings for smaller investors alongside global investors like big-name VCs and family offices. In recent years, OurCrowd has seen institutional money top individual investor participation as it too looks to scale and become sustainable. Bigger deals and more mature issuers are needed as just like any VC the few wins pay for the vast number of investments.

Early-stage investing is not for the impatient nor the risk-averse but it is also critical to creating an innovation-driven economy. New, innovative young firms raise risk capital which is immediately injected back into the real economy creating jobs and teaching skills. Many of these firms will fail but a few will survive and thrive. That is how you get to the next Apple. Crowdfunding platforms have emerged as an important funding venue for private firms aiding in economic growth while broadening access to capital. A combined Seedrs and Crowdcube operation will most likely be better positioned to expand into other markets while adding new services, eventually generating a profit, but that is not forgone conclusion at this point in time until the CMA makes its decision.

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Written by bizbuildermike · Categorized: Crowdfunding · Tagged: 2020, angel investors, apple, Asia, business, ceo, cma, company, competition and markets authority, conversations, Cover, crowdcube, Crowdfunding, deals, Economic Growth, economics, economy, Europe, Event, fail, Family, Featured Headlines, finance, fintech, founder, founders, fund, funding, Future, Global, going, international, Investing, investment, Investment Platforms and Marketplaces, Investments, investor, Jobs, market, markets, merger, money, more, Offerings, opinion, other, ourcrowd, platforms, portfolio, Private Equity, Products, return, returns, risk, securities, seedrs, step, sustainability, sustainable, Technology, uk, United States, us, Venture Capital, world

Feb 01 2021

Blockchain tech makes sustainable development goals more achievable

United Nations Secretary-General António Guterres estimates trillions of U.S. dollars per annum is needed to achieve the 2030 Sustainable Development Goals. The question is: “Where would it come from?” Official development aid, philanthropy and public finances cannot suffice, which means the needle is moving toward private capital to fund sustainable development projects.

Related: The UN’s ‘decade of delivery’ needs blockchain to succeed

But the gap between financing and the environmental impact does not exude the confidence of private investors to fund development projects. India, a center of sustainability risks and innovative interventions, offers an example of this gap. Between 2014–2015 and 2018–19, corporate social responsibility, or CSR, spent by the approximately 1,100 listed Indian corporates grew at a rate of 16%, while India’s score on the United Nations Development Programme’s Human Development Index grew by roughly 1% compound annual growth rate, or CAGR. Ironically, most CSR spending by Indian companies goes to education and health — the very sectors the HDI index focuses on.

It is time for blockchain tech

Can blockchain technology be a workable solution? It can because development projects conduct measuring, reporting and verification, or MRV, processes measure the outcome and impact of projects. Most readers are aware that distributed ledger technology stores data batches in blocks on the network, and the need for independent verification from the network’s users makes the records transparent, secure, verifiable, and immutable. These are the very attributes by which blockchain can improve the MRV processes, thus improving data auditability and reducing misreporting/fraud of data. This can incentivize private capital to consider investing in this space.

Moreover, if we must identify the precise activity of a typical development project where blockchain technology can be leveraged, then it would collect and time-stamp project-level data for monitoring purposes. The challenge is many resource-crunched development projects, especially in developing countries, still collect field data by hand, which can lead to inaccuracies, mistakes and fraud. With a blockchain, such data can be collected and reported in a secure, transparent and verifiable manner.

What also adds adverse effects is the local institutions in the developing countries that implement such projects often lack the systems to ensure the data they report is verifiable. Weak regulations in such countries make it difficult to hold such local institutions to account. Add to this the distance between foreign investors and these local projects, and it becomes harder to stay on the same level.

Blockchain can reduce the data risks of local-level institutions, improve the validity of the data they report for impact, and instill confidence in foreign private donors/investors to fund such development projects.

Blockchain and MRV processes

What this implies is more financing flow can be committed to the local level. Back in 2017, the International Institute for Environment and Development estimated that only 10% of the $60 billion in public and private climate finance is directly committed to the local level, which is partly due to such perceived data risks. Using blockchain to improve MRV can facilitate greater access to capital for local-level institutions.

With blockchain enabling local projects to report verifiable performance as part of their MRV processes, local development institutions can gain a greater supply of capital. The Amazon in Brazil is an example. The Rainforest project uses blockchain and the Internet of Things to record and transfer data from electrical meters, robotic appliances and emission monitors on the environmental impact. Remote sensing satellites independently verify the status of patches, upon which blockchain smart contracts directly reward the farmers who preserve their rainforest patches. The outcome data is verifiable, and the exclusion of intermediaries while transferring incentives minimizes administrative costs and the siphoning of funds.

Blockchain-enabled MRV processes help disintermediate the intermediaries in a social or sustainability bond issuance, thus reducing issuance costs and making it possible for small enterprises to access the bond market or aggregate smaller assets into bonds. Already, leading Spanish bank BBVA uses blockchain to structure green bonds and loans.

As long as limitations such as internet capacity and technology literacy can be overcome, blockchain’s revolutionary role in improving the MRV processes around data can mobilize more private capital investments for development projects executed by local-level institutions in developing countries.

This article was co-authored by Sourajit Aiyer and Jae-Hoon Kwak.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sourajit Aiyer is a consultant at South Asia Fast Track Sustainability Communications. Previously, he worked with traditional and sustainable finance organizations. He has written three books, over 160 articles for 60 publications, given over 30 guest-talks at various universities and conferences, and curated 20 webinars with over 50 international domain-experts.

Jae-Hoon Kwak is the CEO at Pan-Impact Korea, a company focusing on social impact via innovative technologies.

Blockchain tech makes sustainable development goals more achievable

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Written by bizbuildermike · Categorized: cryptocurrency · Tagged: 2017, amazon, article, Asia, blockchain, bond, Bonds, books, Brazil, ceo, company, Compound, data, Developing Countries, distributed ledger technology, dlt, Education, Environment, environmental, finance, fraud, fund, green, health, human, index, India, international, Internet, Investing, Investments, Korea, Ledger, market, more, opinions, report, reward, smart contracts, social, Space, sustainability, sustainable, tech, Technology, u.s., United Nations, verification

Jan 22 2021

A Day in the Life of Dominique Crenn, Restaurant Pioneer and VitaBowl Visionary

This week, we’re talking with Dominique Crenn, chef and owner of world-renowned restaurants Atelier Crenn, Petit Crenn, and Bar Crenn. In November 2018, Dominique became the first female chef in the US to receive three Michelin Stars. 

As an active member of the international culinary community, Dominique promotes innovation, sustainability, and equality through her restaurant ideals, focusing on cuisine as a craft and community as an inspiration. 

Most recently, she’s stepped into the role of Head of Culinary Council for VitaBowl, now funding on Indiegogo InDemand.

7:30 A.M. Awake. Check the calendar for the day. 

8 A.M. Feed my dog, Maxi. I don’t drink coffee anymore and don’t eat anything for breakfast. I have fresh-pressed green juice and hot tea. Food is medicine!

9 A.M. Shower, exercise, take the dog out.

10 A.M. Head into the restaurant. Meet with the team regarding the plan for the day.

11:30 A.M. Lunch on the go is usually early- a Vitabowl or something light. 

11:30 A.M-1 P.M. My afternoon consists of phone calls, meetings, and interviews. A lot of my time right now is spent speaking out in support for small business and needed assistance from the government during the pandemic.

2 P.M. Staff meal if I am at Atelier Crenn. My team makes the best food everyday! Today is mushroom lasagna, Bleu Belle Farm Vegetables, and freshly-baked baguette garlic bread.

3-5 P.M. Meeting with Research & Development Chef, JC, and Pastry Chef/Business Partner, Juan Contreras. Menu planning and business forecast for the month

6 P.M. Head home and make dinner for me and Maxi. Maxi has a delicious mix of ground venison and vegetables. I usually have a big bowl of something hot – pasta or soup.

7-9 P.M. Reading new books and cookbooks. Jotting down ideas for new menu items for Atelier Crenn and Vitabowl.

9 P.M. Relaxing before bed with Netflix, Amazon, and Hulu! 

10 P.M. Lights out!

We also caught up with Dominique in an exclusive Q&A:

INDIEGOGO: How and why did you become an entrepreneur? Was it something you always intended for yourself? 

DOMINIQUE CRENN: Because we are all entrepreneur at heart. I, like many others, love to create things. I didn’t intend to be one but I followed my heart and it brought me here.

IGG: What makes your Indiegogo project unique? 

DOMINIQUE: Vitabites is so much goodness in one little bite. You can get everything you need at once, vitamins, energy, and deliciousness. How does that not make you happy? 

IGG: What’s your biggest piece of advice for women who want to start their own business?

DOMINIQUE: Know who you are, be confident, and know your vision. Surround yourself with good people who know more than you, and have a good lawyer (laughs).

IGG: What tools (gadgets, apps, books, podcasts) would you recommend to anyone starting their own business, crowdfunding campaign, or project? 

Dominique takes a moment to show appreciation for one of her chefs.

DOMINIQUE: The best tool is a journal- a small notebook for writing everyday. Jot down all of your ideas and dreams. Be curious about what you do not know. Read everything you can. If you are true to yourself, your dream will come. 

IGG: What’s your favorite Indiegogo campaign, or a campaign you’ve recently supported?

DOMINIQUE: VitaBites!

Want to hear more from Dominique? Check out our recent IG Live with her here. You can also find her on Instagram at @dominiquecrenn, @atelier.crenn, and @petitcrenn.

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Written by bizbuildermike · Categorized: Crowdfunding · Tagged: a day in the life, amazon, Apps, Behind The Scenes, books, business, Community, Crowdfunding, dog, energy, entrepreneur, Food, funding, gadgets, Go, government, green, ideas, IGG, innovation, instagram, international, more, netflix, pandemic, research, restaurant, small-business, supported, sustainability, us

Dec 24 2020

UK – EU Reach Trade Deal for Christmas

The United Kingdom and the European Union have reached a trade deal just in time for Christmas.

The UK government said they have agreed on a zero tariff-free trade deal including a commitment to maintaining high labor, environment, and climate standards without giving the EU any say over our rules.

The government added that they may now take full advantage of the fantastic opportunities available to us as an independent trading nation, striking trade deals with other partners around the world – perhaps a tip in the direction of a US-UK deal.

The United Kingdom has agreed a Free Trade Agreement with the European Union.

See what this deal means for you ⬇️ pic.twitter.com/x4DetmQqcO

— UK Prime Minister (@10DowningStreet) December 24, 2020

Prime Minister Boris Johnson declared victory in the arduous negotiations simply stating a deal is done.

The deal is done. pic.twitter.com/zzhvxOSeWz

— Boris Johnson (@BorisJohnson) December 24, 2020

The UK Federation of Small Businesses (FSB) National Chairman Mike Cherry issued a comment on the news of a deal:

“After such a torrid year, and during such a disrupted festive trading season, it’s a huge relief to see negotiators finally strike a deal.  The work of looking through the detail of the agreement to map out exactly what it means for the small firms that make-up 99% of our business community now begins. As well as going through the terms of access to each other’s markets, we are keen to see the Small Business Chapter that we have championed and encouraged both sides to include. What we need from here is tangible, targeted support, including £3,000 transition vouchers that small firms can spend on the training and advice required to navigate a new trading relationship with our biggest export market.”

European Commission President Ursula von der Leyen stated:

“We have, finally, found an agreement.  It was a long and winding road. But we have got a good deal to show for it.  It is fair and balanced. And it is the right and responsible thing to do for both sides.”

The agreement covers not just trade in goods and services, but also a broad range of other areas, such as investment, competition, state aid, tax transparency, air and road transport, energy and sustainability, fisheries, data protection, and social security coordination. The agreement is said to provide for zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin.

Of note, there will be no more mutual recognition of professional qualifications. UK financial services firms will lose their financial services passports.

A document created by the Commission outlining the major changes is embedded below.


eu-uk_trade_and_cooperation_agreement-a_new_relationship_with_big_changes-brochure

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Written by bizbuildermike · Categorized: Crowdfunding · Tagged: Brexit, business, Businesses, Christmas, Community, data, deals, energy, Environment, European Union, federation of small businesses, financial services, fsb, General News, Global, going, government, investment, Labor, market, markets, more, news, note, other, passports, Politics, Legal & Regulation, president, said, security, small businesses, small-business, social, Social Security, sustainability, trade, trading, Twitter, uk, united kingom, united-kingdom, us, work, world

Dec 21 2020

Global Energy Company Enviva Joins Forces With GoChain to Pilot Blockchain Technology for Sustainable Biomass

Enviva, a global energy company that specializes in sustainable wood bioenergy, announced on Monday it has joined forces with blockchain company GoChain to launch a new pilot program designed to enhance the traceability of sustainable biomass. According to the duo, this pilot program identified a select group of suppliers from Enviva’s wood sourcing regions in the U.S. Southeast to monitor various data elements, such as forest tract locations, load weights, fiber commodity types, and forest types.

“Leveraging GoChain’s blockchain, Enviva was able to monitor the movement of wood fiber in real-time from select forest tracts at the time of harvest to Enviva’s wood pellet production plants with a unique QR code.”

The pilot also reportedly provided real-time geofencing, data analytics, and notification capabilities. In total, more than 1,000 loads of biomass were delivered from the forest to the production plant and recorded “on-chain” during the pilot.

“The results of the pilot yielded considerable insights and the pilot has the potential to further augment the accuracy of Enviva’s proprietary Track & Trace (T&T) system, which provides publicly available data and tracks exactly where the low-value wood used in the production of Enviva biomass comes from. The initial pilot is among the largest-scale, if not the largest-scale, pilot of blockchain technology to date in the global biomass industry. Given the pilot’s success, Enviva anticipates further exploration and piloting of blockchain technology.”

Enviva went on to add that it elected to partner with GoChain on the pilot program because of their dedication to sustainability and innovative green technologies.

Source

Written by bizbuildermike · Categorized: Blockchain, Crowdfunding · Tagged: Augment, biomass, blockchain, Blockchain & Digital Assets, company, data, energy, enviva, fiber, Global, gochain, green, more, partnership, sustainability, sustainable, Technology, u.s.

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