A leading crowdfunding platform claims that its 12.9% non-tax-adjusted rate of return has far outperformed the wider venture capital industry and FTSE 100 over a 10-year period.
Seedrs, the UK platform that was bought by US start-up investing platform Republic two years ago and has helped companies from fintech unicorn Revolut to bamboo loo paper maker Cheeky Panda, said its portfolio of crowdfunded investment had an internal rate of return (IRR) of 18.4% on a tax-adjusted basis for the period from 2012 to the end of 2022.
For the same period, the British Venture Capital Association (BVCA) reported a gain of 17%, a 6.5% gain for the FTSE All-Share and 6.3% for the FTSE 100.
Seedrs, which was founded in 2009 and became the first regulated equity crowdfunding business in the world, calculated the return an investor would have made had they invested the same fixed percentage of every fundraising on Seedrs between 2012 and 31 December 2022, a period where 1,038 businesses raised money.
If the investor instead invested a fixed amount in each deal, the non-tax-adjusted gain would have been 7.8% and 15.6% on a tax-adjusted basis.
At the end of last December, there were 792 active businesses, of which 18 are currently valued between £100 million and £1 billion, the largest being Revolut.
Over the last two years, Seedrs said 80% of campaigns launched on the platform were successful in achieving their funding goal.
Kirsty Grant, managing director of Seedrs, adding that the platform has broadened access to what it calls 'early-stage private equity' over the past decade.
"Where historically, investing in startups and high growth companies was a highly restricted and exclusive investment arena, in 2023 it could not be easier to invest in some of Europe’s most innovative companies right from the start."
Grant said the IRR of the full 'portfolio' shows the quality of the businesses that have used the platform, though is a "passive indicator" of overall performance.
On the downside, 217 companies on the platform, around 21% of the total, have been wound up or are in the process of winding up.