What is a secondary campaign?
A secondary campaign offers equity from existing shareholder(s) "sellers".
This differs from a primary campaign where 'new' equity is issued by the business.
In most cases, the investor will still be purchasing under the Seedrs nominee.
Sellers may either be selling from within the nominee or transferring shares held directly into the nominee.
Who are sellers?
Sellers may be early investors like Family & Friends, Angels, Founders, Employees and Institutions (Funds, VCs) or later stage smaller investors looking to divest.
Why are they selling?
Their reasons will be as varied and you should be careful to conduct due diligence before deciding to make an investment, just as if you were making any other equity investment.
Occasionally and where relevant we will disclose who is selling and their reasons should we feel it necessary for the campaign.
Secondary campaigns share many traits with Primary campaigns:
Time limited to 30 days;
After you invest you must wait for the campaign to close after which will follow a ‘settlement’ period (average 2 weeks) before shares will be credited to your account;
You will receive beneficial ownership of shares in the company and the legal title will be held by Seedrs. Learn more about this here.
Any terms, conditions or abnormalities that differ from a standard investment will drawn out and listed under ‘key terms’ in the campaign;
Like primary campaigns a secondary campaign can be cancelled if the ‘minimum target’ is not met.
But there are some key differences which should be noted:
There is a fixed amount of equity on offer, after this fixed amount is sold the campaign will close;
Your investment funds will be paid to the seller(s), not the company. As a result, the number of shares offered has nothing to do with the business nor its plans for growth and should not be construed in that way. These are existing investors with their own reasons for selling as mentioned above;
As we are only offering a fixed amount of shares the concept of a ‘percentage funded’ is less relevant and will not be displayed. We will instead show how much has been sold and how much is still available;
Given the business is not raising funds through the campaign, the pitch length will be shorter than a primary campaign because the pitch does not need to explain how the funds will be used. The information contained will be similar to a business profile - basic historical data and team information. Any pertinent information related to the shares or the sellers will be additional information added where possible.
Transaction documents for the transaction will primarily be between the selling shareholders and Seedrs, rather than with the company. Therefore, the standard warranties that Seedrs generally requires on a primary campaign will not apply.
Secondary campaigns are not eligible for SEIS / EIS relief
Shares purchased in a Secondary Campaigns will not be eligible for SEIS or EIS relief. If you subsequently purchase newly-issued shares in the same business while you still hold the shares you bought in a Secondary Campaign, you will not be able to claim SEIS or EIS relief in respect to the newly issued shares.
What happens after the campaign is closed?
Much like our portfolio businesses, once a secondary campaign has closed, subject to the terms of the campaign, the business’ profile will appear in our Secondary Market and act in exactly the same way as a business that might have raised a primary round with us. Given this, it is unlikely (but possible) another secondary campaign will appear for the same business as shareholders (either under the nominee or being held directly) will have the opportunity (subject to the appropriate agreements being in place) to list their shares directly in the market.
Secondary campaigns that aren't led by the business
Some secondary campaigns are opportunities to purchase shares in a business from a private shareholder. Neither Seedrs nor the shareholder selling their shares has any influence or connection with the management of the business. In these instances we flag on the campaign that the business will not be involved and the post investment experience of the purchasing these shares may also differ. For more information on how this may differ please read this help article.