Member Article

Crowdfunding beats the markets in Seedrs first-ever portfolio analysis

Seedrs, the London-based crowdfunding platform, has released its first-ever analysis of 253 deals that have been funded on the platform since 2012.

The figures, put together by Ernst & Young, analysed the performance of investments on the platform between July 2012 and the end of 2015 and found that, on a fair value basis, and found that investors with portfolios of 20 or more investments outperformed the market with average Internal Rate of Return (IRR) of 15.01%.

When taking into account tax relief initiatives such as the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS), which are tax-breaks set up by the government to encourage investment, the annualised rate of return rose to 41.87%.

While the figures only took into account deals on Seedrs’ platform, they underline the increasing potential of crowdfunding as an investment model which provides benefits to investors as well as businesses.

Crowdfunding platforms such as Seedrs and its rivals Crowdcube and SyndicateRoom have driven significant growth in the sector in recent years, which was worth £332m in 2015 according to figures released by Nesta UK.

Jeff Lynn, Seedrs co-founder, commented that the figures show that investors are increasingly looking at crowdfunding as a way to grow buoyant portfolios as equity crowdfunding becomes even more of a mainstream proposition.

He said: “The Seedrs portfolio has achieved an IRR in excess of nearly every other asset class, and that’s even without taking into account the impact of tax reliefs.

“As importantly, our active investors have shown that, on average, they can beat the market, using Seedrs to build portfolios of outperformers.

“It is difficult to overstate the importance of this data: it is a game-changer for us and for the many investors from all over Europe (and, soon, the United States) who allocate capital through our platform.”

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