What is a secondary campaign?
A secondary campaign offers equity from existing shareholder(s) (sellers) and this differs from a primary campaign where equity is issued by the business by issuing new shares.
You will be buying shares under the Seedrs nominee. Any applicable stamp duty will be included in the price and will be paid and administered by Seedrs.
Who is selling?
Selling shareholders may be early investors like Family & Friends, Angels, Founders, Employees and Institutions (Funds, VCs) or later stage smaller investors looking to divest and anyone in-between.
Why are they selling?
Their reasons will be as varied as their holdings and you should be careful to conduct due diligence before deciding to make an investment, just as if you were making any other equity investment. Occasionally and where relevant we will disclose who is selling and their reasons should we feel it necessary for the campaign.
What are the similarities with a primary campaign?
Our secondary campaigns share many of the traits with primary campaigns that you are familiar with already:
they are time limited to 40 days;
After you invest you must wait for the campaign to close after which will follow a ‘settlement’ period (average 2 weeks) before shares will be credited to your account;
You will receive beneficial ownership of shares in the company, and these will be held under a nominee with our standard terms and conditions, here;
After settlement and subject to the conditions of the company and eligibility, these will be tradable in our Secondary Market;
Any terms, conditions or abnormalities that differ from a standard investment will drawn out and listed under ‘key terms’ in the campaign;
Like primary campaigns a secondary campaign will be cancelled if the ‘minimum target’ is not met. Whilst the secondary campaign doesn’t make it explicit in the campaign itself - all are subject to a minimum sold amount of £100k, please read on for more details.
What are the differences with a primary campaign?
There are also some differences with a Secondary campaign:
There is a fixed amount of equity on offer, after this fixed amount is sold the campaign will close;
Your investment funds will be paid to the seller(s), not the company. As a result, the number of shares offered has nothing to do with the business nor its plans for growth and should not be construed in that way. These are existing investors with their own reasons for selling as mentioned above;
As we are only offering a fixed amount of shares the concept of a ‘percentage funded’ is less relevant and will not be displayed. We will instead show how much has been sold and how much is still available;
Given the business is not raising funds through the campaign, the pitch length will be shorter than a primary campaign because the pitch does not need to explain how the funds will be used. The information contained will be similar to a business profile - basic historical data and team information. Any pertinent information related to the shares or the sellers will be additional information added where possible.
Transaction documents for the transaction will primarily be between the selling shareholders and Seedrs, rather than with the company. Therefore, the standard warranties that Seedrs generally requires on a primary campaign will not apply.
Is tax relief available in a Secondary Campaign?
Shares purchased in a Secondary Campaigns will not be eligible for SEIS or EIS relief. If you subsequently purchase newly-issued shares in the same business while you still hold the shares you bought in a Secondary Campaign, you will not be able to claim SEIS or EIS relief in respect to the newly issued shares.
Why not just use the secondary market, why a campaign?
Secondary campaigns are primarily used for businesses that are new to Seedrs in order to establish a profile in our portfolio. Shareholders offering their shares must achieve a minimum of £100k in secondary sales in total for the business they are selling their shares in to join our portfolio. If this minimum is not met, all sales will be cancelled and funds returned to buyers.
What happens after the campaign is closed?
Much like our portfolio businesses, once a secondary campaign has closed, subject to the terms of the campaign, the business’ profile will appear in our Secondary Market and act in exactly the same way as a business that might have raised a primary round with us. Given this, it is unlikely (but possible) another secondary campaign will appear for the same business as shareholders (either under the nominee or being held directly) will have the opportunity (subject to the appropriate agreements being in place) to list their shares directly in the market.