Can offline investments count towards the campaign target?
Generally, investments provided directly to the company outside of the Seedrs platform can be reflected in the campaign provided it is part of the same funding round. In order to reflect direct investment as part of the funding round, the investment needs to be:
(a) on the same economic terms as Seedrs investors;
(b) a cash investment (not conversion of debt or provision of non-cash forms of investment); and
(c) coming into the company at or around the same time as Seedrs investors.
What does the “same economic terms” mean?
This means that investors should:
- pay the same price per share;
- receive the same class of shares; and
- be exposed to the same risks.
Here are some examples of what we cannot reflect:
- Shares for the supply of goods or services: This is where shares are being issued to an investor who, instead of paying cash, has provided services or goods to the company.
- Shares for credit notes: This is where an investor pays for the shares by way of a credit note, whether that’s for services, goods or cash to be provided in the future.
- Converting debt to equity: This is, for example, where a loan is written off in exchange for shares or ‘converted’ to equity. The campaign progress bar gives investors the impression that a specific amount of cash is being injected into the company to fund its growth. However, in a debt conversion, the company isn’t actually receiving any further cash to spend on the activities described in the campaign.
- Investments received too far in the past: If the investment is not being made at the same time as Seedrs, speak to the investment team about the details.If the investment was made a long time ago, we will not be able to include it as part of the same round as it will give an incorrect view of the company’s cash position. That’s why we expect funds from offline investments to be received by the company contemporaneously with the campaign.
If you have any questions this, or any other issue relating to reflecting direct investments in your specific campaign, then a member of the Seedrs team will be happy to discuss this with you.