Crowdfunding Enters New Phase With Secondary Market

Crowdfunding platform Seedrs is launching a ‘trading Tuesday’ for investors to buy and sell shares in start-ups.

The trading day is listed as the first of a series of regular chances to take part in the platform’s secondary market.

Seedrs has tested the formula since 2014 and has completed 200 trades involving 2.5 million shares.

Currently, only shareholders in a business can buy shares and prices are set at a fair valuation, but the platform hopes to open the market.

“The implementation of a secondary market for private shares is actually quite complex. This is why it doesn’t really exist in any meaningful way yet,” says Seedrs.

No hurry to develop market

“The market needs to work for buyers, sellers and entrepreneurs, and it can be difficult to balance all the parties’ interests. We could have rushed a simple notice board for investors a long time ago, but we know that would be a terrible experience for everyone. So we decided to do it properly.

Seedrs promises a secondary market that continually evolves and improves.

“We have spent a lot of time working through the issues surrounding a secondary market, designing a model that we believe addresses the key concerns that our customers may have, whilst also allowing the market to operate in the most efficient way,” says the platform.

“It is important to note there will be many iterations of this product once our beta version is launched, with new features and capabilities introduced over time based on feedback and data.”

When are Trading Tuesdays?

Seedrs CEO Jeff Lynn explained that creating a secondary market takes time as the platform needed to reach a critical mass to make the initiative a success.

“Beginning on the first Tuesday of every month, the market will be open for one week. During this time, investors will be able to buy and sell shares from each other,” said Lynn.

“The trades will take place ‘under the nominee’. This means that our nominee company will continue to be the legal shareholder of the shares, but instead of holding them on behalf of the seller, the nominee will now hold them on behalf of the buyer.”

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