investment
Jane Imrie

CMA: Crowdcube and Seedrs merger poses “real risk” to market competition

A planned merger between two of the UK’s main crowdfunding platforms has been blocked due to concerns around market competition.

The Competition and Markets Authority (CMA) has found that equity platforms Crowdcube and Seedrs compete closely against each other, and that a merger between the two could cause SMEd and investors to lose out.

Kirstin Baker, chair of the CMA inquiry group, explained: “Investment in small and growing businesses is vital to the UK economy as we emerge from the coronavirus pandemic, and we have given this deal careful consideration.

“These are the two largest equity crowdfunding platforms in the UK, with at least a 90 per cent share of the market between them and we see them competing closely on price and innovation. This means the merger could lead to less choice and higher fees for SMEs and investors.

“We have therefore reached the view that blocking this merger is likely to be the best way to maintain competition. The decision to block any deal is not taken lightly and is only made if there is a real risk of customers losing out.”

Seedrs commented: “We are deeply disappointed with these findings, and we firmly disagree with the CMA’s view that this would be an anti-competitive transaction.

“We believe strongly and unreservedly that this merger would have a highly positive outcome for British small businesses, helping to provide vital funding for thousands of ambitious companies in the future.”

Crowdcube added: “We’re obviously disappointed with the CMA’s decision, however, Crowdcube recorded outstanding levels of growth in the last 12 months and remains in a very strong financial position following record revenue in 2020 and two consecutive quarters of profitability.

“We continue to invest in our people and products and we expect to be profitable again in the first half of 2021 with an unprecedented level of high profile European businesses set to fundraise with us in the coming weeks.”

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