LFP025 – Investor-led Equity Crowdfunding – a Deep Dive with Goncalo de Vasconcelos CEO Syndicate Room


I am delighted to be joined on the show today by Goncalo de Vasconcelos CEO and founder of Syndicate Room who are one of my must-know-about equity crowdfunding platforms as they have originated an “investor-led” model of equity crowdfunding which has some powerful advantages.

As I have previously mentioned equity crowdfunding seems to me to occupy this triangle whose three vertices are spivs, “pile ’em high and sell em cheap” and professional. No-one resides at any of the vertices and the whole thing is in evolution.

Maybe I should be clear what I mean by professional … there are plenty of professional firms out there … but I mean more “professional in the way that well established stock exchanges are”. The London Stock Exchange or Deutsche Boerse eg I would say are pretty professional. Fintech as a whole hasn’t got there yet [although as we heard in LFP023 I think B2B-FX is the most professionalised subsector of fintech]

Syndicate Room are definitely one of the few fintech equity crowdfunding firms nearest the professional vertex in my opinion.

Their interesting business model innovation is investor-led crowdfunding (as opposed to company-led which is the general model).  All of their deals are led by an experienced angel investor who has a personal stake in the deal – no doubt far higher than you or I who in essence co-invest alongside. Thus he has conducted his own due-diligence, price negotiation etc before investing.

Topics discussed include:
– Goncalo’s background in Civil Engineering and journey from there (and Portugal) to the UK and crowdfunding

– the origins of the idea of investor-led crowdfunding as being Goncalo’s desire to invest alongside experienced angels but not being able to

– the problem at the time was that the process was not efficient enough – so it would eat up a huge chunk of the investable funds

– in essence Syndicate Room expands the ability of small investors to co-invest (from £1,000 upwards) alongside experienced angels

– equity crowdfunding as the future of equity finance as it can be a very efficient process

– the importance to the economy and entrepreneurs/small companies of a far faster and more efficient process for raising equity. The existing process could take 6-12mts which is a huge time in todays fast moving world

– conflicts in deals between different classes of investors – eg and esp VCs and angel investors

– other equity crowdfunding models are “company-led” – ie the company sets the terms – especially the price (which is a mild version of a potential conflict of interest). The investor-led model is led by the results of a negotiation between lead investor and the company and potentially removes this conflict of interest between the company (ie earlier investors) and the crowd

– the difficulties of the concept of “valuation” in equity per se even for the largest companies let alone small companies

– what business angels are really like … nothing like the negative stereotype that the (taxpayer-funded) BBC in particular (for some bizarre reason) likes to portray. See Goncalo’s article “Forget the Dragons – Welcome To The Real World Of Angel Investing”

– the positive but thin evidence about angel investment returns; the more extensive evidence for poor returns for VC over a long period

– what does diversification mean? And in particular the misapplication of diversification in equity crowdfunding in general if sector returns are poor

does it make sense to talk just about assets without taking into account the process of investing in them? Eg “spray and pray” passive buying of deals vs “focused/researched” angel investment

– risk in equity finance – pricing, due diligence, A/B/C shares… My article on AltFi News covering these (and more) Risk in Equity Crowdfunding – Oh Dear What Can The Matter Be?”

–  the pros and cons of comparing equity investment to gambling 🙂

– the transparency of the whole industry around data being very very poor right now – eg what the due diligence is, how much has been raised, what percentage of companies have failed, what percentage of listings get funded etc

– on the latter Syndicate Room has a record of over 80% of businesses that they have listed get fully funded; they suspect the – unknown (?!) – industry average might be as low as only 10-12% get funded

– of the 30 firms that have raised equity via Syndicate Room all are still going

– the need and value of an independent firm collecting all the data and producing indices and metrics

– Syndicate Room tends to attract more sophisticated, technical businesses with a lot of IP that can protect their competitive advantage – eg 1/3 of their deals are in healthcare, 1/4 in engineering.


And much much more!

A must-listen to episode for anyone with any interest in equity fund-raising or investing 🙂