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Crowdfunding deal off

Seedrs and Crowdcube drop plans for merger

Andy Murray

Investor: Andy Murray

Rival crowdfunding platforms Seedrs and Crowdcube have dropped plans for a merger after the competition watchdog intervened.

The two companies are loss-making and argued that a merger would allow them to cut costs and deliver new services to investors and companies. They had hoped to create “one of the world’s largest private equity marketplaces”.

But the Competition and Markets Authority’s provisional findings published on Wednesday said the tie-up would reduce competition in the market.

Today the companies agreed to terminate the merger. Seedrs, which is used by tennis star Andy Murray to invest in growth firms, said it had raised alternative funding for the business.

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Executive chairman Jeff Lynn said in a blog post: “We fervently disagree with the CMA’s view, but given the low likelihood that they will change their mind at this point, we have concluded that it does not make sense to continue the battle.

“However, we had prepared for this possibility, and we’re pleased to announce that we have agreed a new funding round for the business. Given the strength of the business’s recent performance, we will be able to use this round to return to our pursuit of major growth initiatives.”

A Crowdcube spokesperson said: “We have jointly agreed with Seedrs, in line with the terms of the proposed acquisition, that both parties are withdrawing from the transaction following the CMA’s findings”

The most recent accounts for Seedrs show that the business made a loss of £4.66m in 2019, wider than the year before.

Crowdcube made an operating loss of £2.63m in the year to 30 September 2019.

The CMA noted in its provisional findings that “both parties are facing challenges in reaching profitability”, but it concluded that a merger between the two, which have a 90% share of the market between them, could have led to less choice and higher fees for small businesses and investors

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