Thursday, 5 October 2017
Muted applause greets Wealthify sale to Aviva
Wealthify raised £1.1m on Seedrs a year ago. Now they have sold a majority share to Aviva. Seedrs investors have no choice but to sell out, it's part of the deal the founders made. Is this really what equity crowdfunding is about?
So in 12 months, Seedrs investors will see a return of 18.74% gross profit on their money. They will lose their EIS from last year's tax return. You also have to figure in the Seedrs Carry Fee, which they take off any profits before handing them out. This fee is 7.5% of the profit - you can do the math.
Well done to the founders of Wealthify first off. Opportunity knocked and you grabbed it.
However to start your SH letter by claiming that your SHs are 'valued' is clearly nonsense. They had no say in this decision. The company may now go on to become very successful but the people who risked their necks for you, have been fobbed off with a 12 month return of under 20%. They were merely human stepping stones used for your own purposes.
Im pretty sure that if that had been on offer but obviously not guaranteed, a year ago you would have failed to raise anything. After you have allowed for the lost opportunity cost and the hassle of the EIS cancellation, is this such a great deal?
Founders and maybe a few others will maintain their holdings and get the full benefit of this down the line if it all goes well.
It is yet another example of the fact that even when things go well for an ECF funded company, shareholders will be lucky to see much by way of a return. In this instance, why were Seedrs shareholders not better protected?