The London, England-based equity crowdfunding platform Seedrs Ltd. announced Monday that it will launch a secondary market to allow investors in companies that have been funded through the platform to trade their shares with one another.
Seedrs says that the development of a secondary market will benefit investors by giving them a chance to cash out earlier, rather than waiting for an initial public offering, or other exit event; while also enabling other investors to increase their stake in a company.
At the same time, Seedrs that companies that have already raised capital via equity crowdfunding may face less pressure to deliver an early exit for investors if a secondary market for their shares develops. It suggests that this could attract more capital by increasing the number of investors that will be willing to participate in an asset class that allows secondary trading.
To start, the firm is planning to launch secondary market trading on the first Tuesday of each month, with the market remaining open for one week. “Shares will trade at ‘fair value’, which is the price that Seedrs marks them pursuant to our valuation policy,” Seedrs says in a statement, and only existing investors in a given company will have the opportunity to buy shares in it.
Over time, Seedrs may change these features, such as expanding the trading window, the pricing mechanism, and the eligibility for investors and companies to participate in secondary market trading, as the market develops. The initial edition of the market is expected to launch by this summer.