I started writing this post on Linkedin, but hit the word limit, hence posting this here first
Which British tech company do you admire the most and why? You cannot nominate your own company.
I was asked by Soumeya Benghanem yesterday when I joined her weekly Clubhouse session (for the second time – yes, they have not kicked me out just yet! Yes I am surprised as much as you are) which company I keep an eye on.
Whilst I help 28 UK tech startups at Techcelerate and pushing forward 3 products (Deal Lite, SkilledUp Life and Progress Hero), I ended up picking Anthony Rose‘s SeedLegals.
I believe Anthony is truly disrupting the fundraising market. Yes, there are kinks in the product and still needs support to learn how to use it effectively, but nonetheless, he has built a product much loved by his customers.
But this is not why I think he is a true disruptor. It’s because of where he would take the product – the product road map. Whilst Techcelerate partners with SeedLegals and I chat with him from time to time, he has not spilled the beans with me, so below is just my mind getting a bit carried away.
Let me ask you another question or two? At which point of a transaction can you make the most money? Is this at the point of raising funding or at liquidation? Well, the answer is at both points.
Looking at how the market is moving, once the only place to liquidate your shares was at the regulated Stock Exchanges. But this is fast changing. Now, you can sell your shares you bought from Seedrs at Seedrs to another sophisticated or a high net worth investor at Seedrs. Seedrs is unregulated and in a way, shares are not available to the public, until you self-certify yourself as a sophisticated investor. This is a backdoor to offering liquidation to shareholders of private companies.
Over the last few years, a number of tech startups have emerged which helps companies from managing cap tables to issuing share certificates and whatnot. Among these are Capdesk, High Castle, Vauban and many more.
But none of them has the market buy-in nor touch so many companies as SeedLegals does. So what could be in the product road map of SeedLegals?
Transactions
Companies are already using SeedLegals to send pitch documents. Once an investment is confirmed, legals are all done via SeedLegals. This has led to both companies and investors having a presence on SeedLegals. This has led to SeedLegals creating the functionality for investors to fund tech startups. So now both parties have accounts and both parties store their documents in SeedLegals. This is already happening. It’s at a very early stage.
Liquidation
If both parties, the shareholders and investors are using the same space, then it’s logical to assume, that one could exit the other using the same space. So it’s a matter of time, before Anthony and his merry men and women introduce the ability to liquidate shares similar to Seedrs.
But
As more and more products start to offer liquidation functionality, would this attract the attention of the regulator and put a stop to it, or demand creation of more safeguards and reporting mechanisms?
Obviously, these activities are unlikely to disrupt IPOs and SPACs, but will offer early liquidation opportunities to those who back early-stage tech companies.
And as such, you will see more and more companies entering the market, which will lure none tech investors to explore tech companies as an asset class.
Deal Lite has already captured over £4.375 billion going into tech startups in the Q1 of 2021, which still has few days to go. If we continue at this pace, 2021 will be an unprecedented year for tech investments. And this trend will continue over the coming years.
What do you think?