You Too Can Invest In a Startup Likely to Go Bust
Equity crowdfunding offers regular Britons a chance to back fledgling companies. So far the payoff hasn't matched the hype.
Seedrs founders Silva and Lynn at their offices
Source: SeedrsThis article is for subscribers only.
In June, three aspiring London entrepreneurs struggling to raise money for a food-delivery startup turned to a crowdfunding website called Seedrs that helps fledgling businesses solicit money from people online. In exchange, backers get a stake in the company—and a payout if it prospers.
The founders had about 700,000 pounds ($875,000) in the bank from outside investors, but brought in an additional 100,000 pounds online. The company, named Pronto, saw crowdfunding as a bridge to keep the business afloat until it could raise more money from venture capitalists. It ended up being a bridge to nowhere.