Is it time to put yourself on the side of the angels in this innovative take on crowdfunding?
Saturday 27 July 2013
Crowdfunding has had more than its fair share of bad publicity with accusations that the sector is amateurish, unregulated and taking advantage of private-investor goodwill.
But the latest variant on the crowdfunding theme, the Syndicate Room, is attempting to bring a little more business savvy to this overpopulated sector.
The Syndicate Room, the first of its type in the world, asks investors to put their money into companies which have already received substantial financial injections from professional business angels. In effect, investors are given the chance to piggy-back on dragons' den style professional investors, who have already piled in the cash.
"Much of crowdfunding is about small amounts of cash to support what I call social enterprise. The syndicate room is different because it is all about using the business know-how and due diligence of the professional class of large-scale private investors," Goncalo de Vasconcelos, the founder and ceo of Syndicate Room said. At £500, minimum investments are higher than crowdfunding sites, which can start at £10, but in return investors are treated in the same way as the predominant angel investor, who has a minimum 25 per cent of the investment.
"Investors through the Syndicate Room get exactly the same quality shares as the main private angel investor, so if he or she makes money so do you, even if you only put in the £500 minimum.
"What's more, you get proportionally the same stake in the company being invested as the angel investor and invariably they drive a hard bargain, which you can be a beneficiary of too," Mr de Vasconcelos added. The site already has a host of companies looking to tempt investors to plough in their cash, including biotech firm Eagle Genomics, online music platform www.psonar.com and business solution firm www.blendology.com.
To be accepted onto the platform these companies have to have received backing from a business angel equivalent to at least 25 per cent of the total amount of the capital they are looking to raise. The firm aims to help at least 12 firms to raise cash in the next year. Typical returns to business angel investors are 22 per cent per year but the Syndicate Room says this is high risk and that investments are illiquid.
"You won't see money in the first three years, expect to wait five to seven years minimum and don't put in what you can't afford to lose or will need in an emergency," Mr de Vasconcelos added.
But such claims of double-digit returns come with hefty health warnings, according to Brian Dennehy, managing director of fundsexpert.co.uk: "First the site needs to build a track record, and we would typically avoid such new ventures until there is one. How much of the £500 is invested? There is no information on this. Who are the lead angels that will be relied on so much? the sums being raised are quite small, so how much top-class due diligence is realistically taking place?"
Mr Dennehy warns any investment in Syndicate Room can be lost in its entirety as it is not part of the Financial Services Compensation Scheme. Having said that though Mr Dennehy does add that he likes the concept: "With the banking system broken as a source of capital these sorts of innovations are desperately needed."
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Questions of Cash: Bupa costs bore no relation to what I'd been quoted
Problem gambling: Amid heavy advertising and a surge in remote sports betting, more and more 16 to 24-year-olds are now seen as 'at risk'
The HiFX guide to managing corporate foreign exchange and international payments
How to start your own internet business
Be warned of the dirty tricks the bailiffs pull
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 The secret report that helps Israel hide facts
- 3 Is Ebola coming to Britain? UK health officials issue warning to doctors as outbreak fears grow
- 4 Richard Dawkins says 'date rape is bad, stranger rape is worse' on Twitter
- 5 Danish TV reporter is all business up top, all party down below
The secret report that helps Israel hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
- < Previous
- Next >
iJobs Money & Business
£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...
£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...
£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...
£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...
Day In a Page
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000